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Treasury & Capital Markets
Philippines eyes retail dollar bond sale amid peso slide
Notes will be issued before the year ends and marketed primarily to Filipinos working overseas
Patricia Chiu 24 Oct 2022

The Philippine government plans to issue US dollar-denominated retail treasury bonds as part of its efforts to raise funds for its various programmes amid rising inflation and a falling local currency.

The treasury bonds, to be marketed primarily to Filipinos who are working overseas, are likely to be issued before the year ends, says finance secretary Benjamin Diokno.

Speaking at the 17th Philippine Summit, organized by The Asset Events+ in Manila on Monday (October 24), Diokno says in Filipino: “The issuance will be very attractive to [overseas Filipino workers], especially those who may be thinking of their children’s school fees five years from now.”

The forum, which returns to in-person format for the first time in two years since going online during the height of the pandemic, is also Diokno’s first private sector engagement as finance secretary. Diokno previously served as governor of the Bangko Sentral ng Pilipinas, the Philippine central bank. The event was organized in partnership with BDO Unibank, SM Investments Corp, UnionBank of the Philippines, China Bank, and Chinabank Capital.

Finance Secretary Benjamin Diokno speaks at the 17th Philippine Summit, an in-person event organized by The Asset Events+ in Manila on October 24. 

In his keynote speech, Diokno highlights “strategic interventions” that the government of President Ferdinand Marcos Jr. plans to activate in order to tackle mammoth challenges brought by rising inflation.

“Over the medium term, the goal is to create high-quality, green jobs,” Diokno says, adding that this can only be achieved through “higher investments in infrastructure, human capital development and a digital economy”.

He says the Philippines’ large pool of young, highly skilled and tech-savvy workers is ready to compete with the global workforce. “This demographic sweet spot is not only an invaluable asset of national development, but also the country’s top contributor to economic growth.”  

During Diokno’s one-on-one with The Asset’s editor-in-chief Daniel Yu, the finance secretary says the country's 2022 growth target of 6.5% to 7.5% is "doable", pointing to the reforms put in place by the country’s finance ministers over the past two decades, as well as the Philippines’ healthy reserves buffer. 

The Philippines is in a “better shape” compared to its neighbours since it can deal with external shocks.

“Right now at US$95 billion, we have about nine months’ worth of cover, and we expect additional dollars to come in from our overseas Filipino workers and also the business process outsourcing (BPO) industry,” he notes. 

Diokno also says interest rates should rise by at least another 100 basis points before year-end. He also hints that the government will move to prevent the peso from overshooting the 60 to the dollar mark.

In the same forum, Diokno’s successor at the central bank, BSP governor Felipe Medalla says the BSP will likely match the US Federal Reserve if it decides to raise rates by another 75bp. 

Medalla also reveals that the US Fed is open to a liquidity arrangement with the Philippines.

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