THE GOVERNMENT will find conditions suitable should it proceed with a plan to sell yuan-denominated debt papers this semester in order to diversify funding sources further, according to a senior executive of First Metro Investment Corp. (FMIC).
鈥淎t the end of the day, it depends on their willingness to go through it,鈥 Christopher Ma. Carmelo Y. Salazar, FMIC senior vice-president and group head of financial markets, said in an interview on the sidelines of the investment bank鈥檚 mid-year economic briefing on Thursday last week.
鈥淲hen they see that there鈥檚 good opportunity, I think they can.鈥
Finance Secretary Carlos G. Dominguez III in April bared his proposal to issue debt notes in the Chinese currency within the 鈥渢hird or fourth quarter鈥 of 2017, involving three- and five-year tenors worth $200 million.
Mr. Salazar said current market rates are supportive should the government decide to wade into this market, with borrowing costs creeping up but at a moderate pace.
鈥淚nterest-rate wise, it鈥檚 still conducive and it鈥檚 not really so high. In terms of getting funding… given that yields are still there and are just on the way up, it鈥檚 still pretty much conducive even for corporate issuers,鈥 Mr. Salazar said.
Monday鈥檚 auction of 91-day Treasury bills saw average yield rise to 2.126%, up by 4.2 basis points from the 2.084% rate fetched last June 19.
Mr. Salazar said raising capital through the Chinese market will allow the Philippines to 鈥渄iversify鈥 its funding sources, reducing exposure to any one issuer.
The Philippine government is looking to borrow up to P727.64 billion this year, higher than the P631.294-billion previously programmed, in order to support a planned surge in public spending for infrastructure and social services.
The government plans to spend about P847.22 billion this year on infrastructure alone, equivalent to 5.32% of gross domestic product (GDP), as part of its 鈥淏uild, Build, Build鈥 program to disburse a total of P8.44 trillion for this purpose from 2017 to 2022, when the current administration ends its term. In 2022, spending on infrastructure alone should hit P1.899 trillion, equivalent to 7.45% of GDP.
National Treasurer Rosalia V. De Leon earlier said that the 2017 borrowing schedule does not factor in the plan to issue 鈥減anda鈥 bonds, citing the need to assess 鈥渆merging developments鈥 in China, which is undergoing economic rebalancing from investment- to wage- and consumption-led growth, as well as the technical requirements of setting up the new borrowing platform.
Next year will see the country鈥檚 borrowing needs jump by more than a fifth to P889.72 billion, with 80% of the amount to be sourced from domestic sources. — Melissa Luz T. Lopez
