The Philippine government is considering funding its 2010 offshore borrowing requirements this year. That makes a lot of sense with interest rates likely to raise and the country facing political risk as a May election looms.

“If you can’t wait until the second half of next year, why not prefund now?,”
said Rafael Algarra, treasurer at Security Bank Corp. in Manila. “And even if
you could wait to take the uncertainty of the election out of the equation,
interest rates might be going up by then.”

Many investors in debt of the southeast Asian nation – rated Ba3 by Moody’s
Investors Service and BB- by Standard & Poor’s Ratings Services – say a good
time for Manila to return to the international bond market would be the fourth quarter, or a bit earlier.

Finance Secretary Margarito Teves said Thursday the government hasn’t ruled out returning to the global bond market this year. “It all depends on timing and, related to that, our cash flow,” Teves said.

The Philippines has international bonds coming due every year through 2020, then 2024, 2025, 2030, 2031 and 2032. To spread out repayments and make as liquid a bond curve as possible, the government may sell bonds that come due in other years or sell additional paper with maturities that have only small amounts already trading.

The forthcoming issue will likely again meet a warm response. “I’d be keen to
participate again if they come back to the market,” said a fund manager.

The Philippines has visited the global bond market twice this year – in
January raising $1.5 billion in bonds maturing in June 2019, and in July with
$750 million in January 2020 bonds.

Both proved successful for the sovereign and investors. The debt priced at
the tight end of the price guidance amid strong demand and then rallied in the secondary market. The latter proved even more impressive, being offered, according to bankers and analysts, at no new-issue premium.