Feb 3, 2023
Philippines Plans Retail Euro Bond to Widen Funding Sources
(Bloomberg) -- The Philippines is looking to broaden its funding sources as its budget deficit remains sizable and yield-hungry investors seek new investments.
Finance Secretary Benjamin Diokno said on Friday the government is considering to sell euro-denominated bonds targeting individual investors. That may come on top of a retail peso bond offering that’s already underway and a retail dollar bond sale planned for the first half.
The Philippines has been raising funding from retail investors via peso-denominated bonds for more than a decade to plug the budget deficit, which swelled to a record 1.7 trillion pesos ($31.6 billion) in 2021 during the pandemic-driven spending spree.
Diokno said the idea to issue retail bonds in euros was pushed by German-based Filipinos who economic officials met during an investor briefing in Frankfurt last week. “I am sure there will be strong demand, and there’s really strong interest,” he said at a forum by Makati Business Club, noting that those bonds are tax-free and offer higher returns.
The government has six outstanding euro bonds due from this year through 2041, according to data compiled by Bloomberg. It is projecting a budget deficit of 1.47 trillion pesos this year, equivalent to 6.1% of gross domestic product.
The Bureau of the Treasury earlier on Friday invited peso noteholders to exchange eligible debts for new retail retail treasury bonds due 2028. The exchange is part of its retail bond sale that’s set to be launched on Feb. 7. The offering will run through Feb. 17.
Read: Philippines Is Said to Plan at Least $545 Million Peso Bond Sale
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