Philippine Government May Issue Retail Dollar Bonds This Month, Treasury Says
Key Takeaways
- •The Bureau of the Treasury said a retail dollar bond offering could take place in the domestic market as early as October, with an existing RDB maturing on Oct. 8.
- •National Treasurer Sharon P. Almanza indicated the bonds would likely mature in under five years, longer than the ongoing 2.5-year retail Treasury bond tenor, as elevated yields push the government toward shorter-term debt.
- •The dollar-denominated bonds will be sold locally because the government has already met its external borrowing target, with gross borrowings reaching P2.25 trillion, or 82.4% of the P2.73-trillion program for 2026, as of August.
- •The government considers dollar-denominated debt cheaper than domestic borrowing amid high local rates; its latest offshore tap was a $2.5 billion triple-tranche offering in June.
- •Rizal Commercial Banking Corp. said retail dollar bonds could diversify funding and tap local US dollar liquidity, but suggested timing the issuance once yields correct lower to cut costs and manage foreign exchange risks.
The Philippine government could issue retail dollar bonds (RDBs) in the domestic market as early as this month, ahead of a scheduled bond maturity, the Bureau of the Treasury (BTr) said.
“It’s possible (in October),” National Treasurer Sharon P. Almanza told reporters on the sidelines of an event on Tuesday, adding that the government may favor short-term tenors given elevated yields.
RDBs are US dollar-denominated government securities sold directly to individual investors in the domestic market. The Philippines introduced the instrument with a debut offering in 2021, billed as the first retail dollar bond sale by a sovereign in Asia, followed by a second offering in 2023.
Ms. Almanza said the bonds will likely carry a tenor of less than five years, though longer than the 2.5-year tenor of the ongoing retail Treasury bond offering. The timing and pricing of the planned retail dollar bond issuance will depend on market conditions, even as an RDB maturity falls due on Oct. 8, she added. Final offer terms had yet to be announced.
The RDB will be offered in the domestic market because the government has already met its external borrowing target for the year, she said.
As of August, the National Government’s gross borrowings had reached P2.25 trillion, representing 82.4% of the P2.73-trillion gross borrowing program for 2026. Domestic borrowings accounted for 74.3%, or P1.68 trillion, while the remaining 35.7%, or P578.2 billion, came from external sources.
Ms. Almanza previously said the government is considering a dollar-denominated issuance as it is cheaper amid high domestic rates.
The government last tapped the offshore debt market in June, when it raised $2.5 billion from a triple-tranche, dollar-denominated bond offering. It raised $550 million from five-and-a-half-year notes at a reoffer yield of 4.699%, $1.65 billion from 10-year bonds at 5.355 and $300 million from the tap of the 2051 global bonds at 5.75%.
Market observers also flagged the urgency of the planned offering. A trader said in a text message that the government needed to issue the RDBs in order to meet its borrowing target for the year despite market uncertainties.
“They really need it. Can’t do anything about timing because the need to borrow comes first. Can’t really wait for something good to happen since there are lots of uncertainties,” the trader said.
Rizal Commercial Banking Corp. said in a Viber message that the RDBs could serve as another way to diversify funding sources and tap US dollar funds locally. However, the bank noted it could be better to time the issuance once bond yields correct lower, in order to save on borrowing costs and manage against foreign exchange risks.
