$1B PHL dollar bonds attract foreign investors, lift debt stock to $62.9B

Foreign investors increased by $1 billion their portfolio of dollar-denominated Philippine debt papers in the first quarter of this year, the Bangko Sentral ng Pilipinas (BSP) said Thursday. BSP officer-in-charge Juan D. De Zuñiga said the debt papers were among the acquisitions of non-residents whose investment and business activities “escalated due to the upbeat business sentiment.” Residents also invested $280 million in the Philippine external debt instruments, the BSP said. The debt papers are part of the country’s total foreign debt which as of last March stood at $62.9 billion—an increase of $1.2 billion or 1.9 percent from the yearend 2011 level. “On a year-on-year basis, debt stock grew by US$2.0 billion or 3.2 percent due to additional acquisitions by non-residents of Philippine debt papers $1.0 billion) and net availments (amounting to) $0.97 billion,” the BSP also said. Declining stock vs. GDP The BSP clarified that “notwithstanding the higher debt level, major external debt indicators remained at very prudent and comfortable levels in the first quarter.” According to the latest official figures, the $62.9 billion in foreign debt is 27.4 percent of the gross domestic product (external debt to GDP ratio). “The country’s external debt to GDP ratio peaked in 1986 at 97.7 percent of GDP but has generally been on a downtrend since 2003, when it reached 68.6 percent down to 31.3 percent in 2008 before picking up slightly to 32.6 percent in 2009,” the BSP said. “Since then, the external debt to GDP ratio declined to 30.1 percent in 2010 and 27.5 percent on 2011,” it added. Concessional, long term loans Most of the debt stock are medium to long term loans (MLT) —88.2 percent, according to the BSP data. “The larger share of MLT accounts means that loan payments are spread out over a longer period of time, resulting in a more manageable level of debt payments,” the BSP explained. Weighted average maturity is at 22.3 years for all the MLT accounts. “Public sector borrowings had a longer average tenor of 24.2 years, compared to 10.9 years for the private sector,” the BSP added.   Only 11.8 percent of the total debt stock is short term made up mostly of trade credits and inter-bank borrowings. — ELR, GMA News