Global equities rout have little impact on PH ’18 financing program

By , on February 7, 2018


After the end of Monday’s trading, the Dow Jones shed 4.6 percent after posting its record-high of 26,616.7 points last January 26. (Shutterstock)
After the end of Monday’s trading, the Dow Jones shed 4.6 percent after posting its record-high of 26,616.7 points last January 26. (Shutterstock)stock 

MANILA — Worries on inflation and its impact on the interest rates, among others, are causing the sell-off in equities around the globe, including the Philippines.

After the end of Monday’s trading, the Dow Jones shed 4.6 percent after posting its record-high of 26,616.7 points last January 26.

The Philippine Stock Exchange index (PSEi) has been also on see-saw after posting record-highs, with the latest historic level of 9,058.62 last January 29.

A day after registering its highest level so far, the Philippines’ main equities index fell to 8,910.48 points and continued to skid for two more days.

It only took a breather last February 2 before decelerating again and ending Tuesday this week with a 0.76 percent, or 65.58 points, drop to 8,550.42 points.

These volatilities, however, would not have a big impact on the Philippine government’s borrowing program for 2018, National Treasurer Rosalia De Leon told journalists Tuesday.

Economic managers have set the external borrowings this year to account for 26 percent of total financing program, slightly higher than the 20 percent earlier target, in line with the plan to take advantage of opportunities before the Federal Reserve implement more rate hikes.

Last January, the government sold USD2 billion worth of 10-year United States (US) dollar-denominated global bond.

De Leon said tapping the offshore market last January, even with volatilities already high, was “a very good move” for the Philippine government since demand for the Republic of the Philippines (ROP) bond remained high.

She said the government was almost done with its foreign borrowings this year since the remaining foreign fund inflows that would be coming from the official development assistance (ODA) loans from multilaterals and the planned issuance of renminbi-denominated Panda bond in China only had a small share on the program.

The Duterte administration targets to issue about USD200 million worth of three- or five-year Panda bond, a maiden issuance for the country, as part of its investment diversification bid.

With the government’s foreign borrowing almost completed, De Leon said the current administration’s program would be adequately financed.

“We have a very strong cash buffer. That’s something that we have also because of our preparations in the early days when we see that rate environments are still appropriate for us to raise enough for this year,” she noted.

De Leon further said that aside from the “very liquid” domestic capital market, which the government planned to tap for the bulk of its financing needs, the administration’s revenue collection continued to improve.

“All told, I think, we still, we’re in the safe harbor as far as 2018. But of course, we continue to monitor the market,” she added.