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By Chino S. Leyco, Reporter
FOLLOWING an upgrade in the Philippines’
outlook by one of three international credit rating firms, the
government has resumed its foreign commercial borrowing, the Bureau
of Treasury said Tuesday.
Finance Undersecretary Roberto B. Tan, who is
also acting national treasurer, said the government will borrow $500
million through the sale of sovereign bonds, or IOUs abroad. This
completes the government’s foreign commercial borrowing
requirement for this year.
Credit Suisse and Deutsche Bank are handling the
bond sale.
“It [the upgrade] added up to the positive
news on the credit stories of the Philippines, so it [is] very much
welcome. It[s] supportive of the bond offering,” he told
reporters.
Moody’s Investors Service last Friday raised
its outlook on the Philippines to positive from stable, clearing the
way for a possible upgrade in the country’s credit rating in the
next six months to a year. An upgrade would allow the country to cut
its foreign borrowing costs. At present, Moody’s rates the
Philippines a B1, which is four notches below investment grade.
If the proceeds from the debt paper sale is not
enough, Tan said the country plans to buy dollars from the market
for debt servicing this year.
“We’ll buy some foreign currency to settle
maturing obligations,” he said.
The government cut its foreign commercial
borrowing this year to half of last year’s program, as it opted to
source more funds from foreign donors, who charge concessional
rates, and local creditors. The move to go local was prompted by
pressure from exporters and overseas Filipino workers hurting from
the peso’s rapid appreciation due to strong dollar inflows.
The government was expected to return to the
foreign commercial debt market in the second quarter of the year,
but the national treasury decided to proceed with the borrowing
after Moody’s upgrade.
The government plans to borrow P346.18 billion
from both foreign and domestic creditors this year, down by 12
percent from the programmed borrowing of P394.01 billion in 2007.
Finance Secretary Margarito B. Teves earlier
said the government would likely cut its foreign borrowings further
this year to help Filipinos overseas and exporters cope with a
strong peso.
Teves said the government could further trim the
share of foreign borrowings to 25 percent of the total from the
revised 30 percent.
The peso, back at the 40-to-a-dollar level, is
Asia’s best performing currency.
In a statement, Moody’s said it has assigned a
B1 rating to the Philippines’ forthcoming foreign currency bond
maturing on January 15, 2032. It said the rating “reflect[s] the
country’s large public-sector debt, which leaves the
government’s finances vulnerable to shocks.”
“The recent change in the rating outlook to
positive from stable was prompted by progress made in stabilizing
public finances, which has placed the Philippines’ key debt ratios
on an improving trend, albeit from relatively high levels,”
Moody’s said.
“The outlook change also reflects policy
success in reducing inflation and anchoring inflationary
expectations in line with the country’s central bank target
range,” it added.
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