ASEAN KEY DESTINATIONS
May 27, 2008
The Philippines is unlikely to make major revisions to its 2008 borrowing mix, the country's national treasurer said on Monday, signalling that Manila may not float an additional $500 million in overseas debt this year, reported Reuters.
"We are focusing more our attention on ODAs (official development assistance)," Roberto Tan, acting national treasurer told reporters. The government will discuss its final 2008 borrowing mix later this week.
Finance Secretary Margarito Teves said earlier this month the government may return to the international debt market this year with a $500 million issue if borrowing conditions were more favourable overseas, especially as domestic debt has become more expensive.
The Philippines currently has a borrowing mix of about 70:30 in favour of domestic debt.
Tan said the government had yet to make a final decision on its borrowings this year but he said the finance department's proposal "will probably not involve a major change" in the mix.
After the government issued a $500 million global bond in January it said it did not plan any more foreign debt this year partly because it did not want to add to foreign inflows that were fuelling a rapid rise in the peso against the dollar.
But since January, the peso has dropped 7 percent as investors pulled out of emerging markets amid a global credit crunch.
A widening trade deficit, exacerbated by the Philippines' reliance on imported fuel, and expectations of slower economic growth have also weighed on the currency.
Rising inflation has also pushed up yields at auction and on the secondary market making borrowing at home increasingly expensive. On Monday, yields at an auction for 364-day Treasury bills were 6.846 percent, lower than the 6.915 percent at a previous auction on May 12 but only after the government rejected bids that it viewed as being unreasonably high.
The government awarded just 1.62 billion pesos ($37 million) worth of the bills out of an offer of 6 billion pesos and a tender of 8.44 billion pesos.