Debt payments down to P378B in first half

By Riza Lozada

The government paid P378.37 billion in debts in the first half, which was 25.5 percent lower than a year ago due to lower amortization and interest payments.

Bureau of the Treasury (BTr) data showed the amount paid for amortization fell 35.95 percent as of the end of June to P226.79 billion compared to P354.08 billion a year ago.

Interest payment in the first six months totaled P151.58 billion, down 1.39 percent against the P153.7 billion during the same period last year.

For last June alone, however, debt payment ticked-up 7.9 percent to P25.04 billion over year-ago’s P23.21 billion while amortization amounted to P5.77 billion, higher than the P5.54 billion during the same period last year.

During the same month, interest payment amounted to P19.27 billion, 9.1 percent higher than year-ago’s P17.67 billion.

In 2016, the government’s debt service amounted to P789.97 billion.

National Treasurer Rosalia De Leon said the government will not be aggressive in prepaying its foreign currency- denominated debts solely because of hikes in U.S. interest rates.

She said movements in interest rates will not have immediate impact on government’s debts since majority of these liabilities have fixed rate.
“About 99 percent (of our debt) are fixed,” she said.

De Leon said the government takes advantage of the low interest rate environment by swapping old debt instruments with new ones that have lower interest.

“This is why we do liability management…We offer new bonds to retire the high coupon bonds when we see the economics,” she said.

The last time the government did a liability management exercise was in January 2017, when it accepted $1.5 bllion worth of dollar-denominated debt maturing from 2019 to 2037 that was submitted for swapping.

This was made as part of the Duterte government’s first 25-year global bonds issuance worth $2 billion with a coupon rate of 3.7 percent, lower than the initial price guidance of 3.95 percent.

Tenders for this issuance reached $4.5 billion while the 14 series of dollar bonds maturing between 2019 and 2037 amounted to $19 billion.

De Leon earlier told journalists that the government is done with its liability management for this year while possible exercise for 2018 is being studied.