The government does not plan to raise $500 million from Samurai bonds

By means of Beatriz Marie D. Cruz, News reporter

THE PHILIPPINE government is looking to raise about US$500 million ($29.22 billion) from an oFOffering Japanese yen-dominated bonds within a year, Treasury Secretary Ralph G. Recto said Tuesday.

Mr Recto said the government also plans to issue Eurobonds in the second half of the year, in addition to the planned oFsupply of papers denominated in yen and dollars.

“I think we will soon start spending the $3 billion that we need this year,” he told reporters on the sidelines of an event late Tuesday. “The process has started, I will put it this way, because I have already signed (the authority).”

The bonds will likely be issued in tranches within the year, with the Samurai bonds possibly issued last, Mr. Recto said.

The government planned to borrow $5 billion this year, of which $2 billion was raised from a global bond issue last May. The remaining $3 billion has yet to be raised.

The Philippines last issued Samurai bonds in April 2022, raising ¥70.1 billion.

“Based on our advisors, I think this is the optimal time to get lower rates. The idea is to do this to get the cheapest borrowing cost,” Mr Recto said in mixed English and Filipino.

Ruben Carlo O. Asuncion, chief economist of Union Bank of the Philippines, Inc., said the government is likely to start borrowing once the Philippine and U.S. central banks start cutting interest rates.

“The government will wait for budget cuts (both from the Bangko Sentral ng Pilipinas and the US Federal Reserve). With lower interest rates, this means cheaper debt, so you’re looking at cost efficiency for government-issued debt,” he said in a Viber message.

The Fed is expected to hold rates steady this week, but easing could begin as early as SeptemberFThe 2% target has almost been achieved.

On the other hand, the BSP previously signaled a possible 25 basis point cut in August.

“The best time to borrow is when you need it. The dollar is strong against the peso, but the yen is weaker against the peso today, so it will probably be more or less a flop,” House Ways and Means Committee Chairman and Albay Representative Jose Ma. Clemente S. Salceda said in a Viber message.

The government’s plan to issue Samurai bonds reFshows how resource-strapped the country has become, said Ateneo de Manila University economics professor Leonardo A. Lanzona.

He also noted that these loans could increaseFlat.

“The problem with lower interest rates, which they expect to do once the Fed lowers its policy rate, is the potential waste of government money in the system. As such, inFInterest rates could rise, which could force the BSP to raise its interest rates again,” Mr. Lanzona said in a Facebook Messenger chat.

On Tuesday, Mr Recto also told reporters that the country will wait for monetary policy decisions from the BSP and the Fed before taking on planned external borrowing for next year.

The National Government (NG) has set its 2025 borrowing program at 2.55 trillion euros, of which 507.41 billion euros will come from gross external borrowings.

In the coming months, the government must be “more introspective and aware of the inflationary consequences of their actions” and more cautious with their spending, Mr. Lanzona said.

At the end of June, NG’s outstanding debt rose to a new high of P15.48 trillion, with 31.71% of the total, or P4.91 trillion, coming from foreign sources.