Philippines Eyes Foreign Debt Markets to Tackle Budget Deficit

(Bloomberg) -- Philippine Treasurer Rosalia de Leon says she is closely watching overseas bond markets to help fund a budget deficit that’s expected to climb to a record this year, and stay elevated in 2021.

“We’re watching developments following the Fed’s decision on their longer-run objectives and monetary policy,” de Leon said in a text message. “We’re also looking at the impact” of Japan Prime Minister Shinzo Abe’s resignation, she said.

The nation will continue to tap “usual suspects” in the overseas markets, de Leon said. The Philippines, one of Asia’s most active borrowers, has sold bonds denominated in U.S. dollars, Japanese yen, Chinese yuan and euro in the past two years.

Philippines Plans $62.4 Billion Debt in 2021 as Deficit Swells

The government is looking to raise $1 billion in dollar bonds and $1.35 billion in yen-denominated notes for the rest of the year to complete $6 billion of planned overseas commercial debt funding, BusinessWorld reported. The Philippines seeks to raise 3 trillion pesos ($61.9 billion) in 2020, of which 74% will come from the domestic market, the report said.

The government expects this year’s fiscal gap to widen to 9.6% of gross domestic product before narrowing to 8.5% in 2021. The budget deficit was at 3.55% of GDP last year.

Asked about BusinessWorld’s report on the planned 2020 offshore bond sale, de Leon said she’s “just watching markets, but not tapping.” The Philippine faces about $2.8 billion in 2021 maturities of dollar, yen and yuan debt, according to data compiled by Bloomberg.

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