THE country’s external debt ratios stayed at manageable levels as of the third quarter despite additional borrowings, the Bangko Sentral ng Pilipinas (BSP) reported late Friday.
External debt totaled $139.64 billion in the July-September period, up from $130.18 billion as of end-June. As a percentage of the economy, external debt rose to 30.6 percent from 28.9 percent in the second quarter.
Gross domestic product (GDP) expanded to $330.84 billion as of end-September 2024 from $311.22 billion a year earlier.
The country’s debt service ratio (DSR), meanwhile, rose to 11.6 percent from 10.4 percent due to the higher recorded debt service payments from January to September 2024.
Gross international reserves (GIR) stood at $112.71 billion, equivalent to 3.92 times short-term (ST) debt and up from 2023’s $98.12 billion.
“The DSR and the GIR cover for ST debt are measures of the adequacy of the country’s foreign exchange (FX) resources to meet maturing obligations,” the central bank said.
The public and private sectors’ financing needs, along with increased interest from non-resident investors in onshore debt securities, drove significant capital inflows during the quarter.
The national government (NG) secured a total of $4.17 billion, with a $2.50 billion Triple Tranche Fixed Rate Global Bonds issuance. It also raised $1.44 billion from official creditors to fund various development programs and projects.
Private sector corporations, the BSP said, also tapped offshore markets to diversify their funding sources and bolster working capital, with net borrowings reaching $1.82 billion for the period.
Investor appetite for emerging market debt securities grew, driven by expectations of a US Federal Reserve rate cut in September 2024 and the weakening of the US dollar.
This led to a net acquisition of $2.77 billion in Philippine debt securities by non-resident investors during the third quarter.
“The positive FX revaluation of borrowings denominated in other currencies due to the relative weakening of the US dollar [largely against the Japanese yen] further increased the US dollar value of the country’s debt stock by $1.56 billion,” the BSP said.
“Negative prior periods’ adjustments slightly tempered the increase by $248.77 million,” it added.
Debt mostly medium, long-term
External debt remained predominantly medium- and long-term at $110.87 billion as of the first nine months of the year, with a share to the total of 79.4 percent.
Short-term debt made up 20.6 percent, or $28.77 billion.
For medium- and long-term debt, $65.98 billion (55.7 percent) had fixed interest rates, $51.20 billion (43.2 percent) variable rates, and $1.35 billion (1.1 percent) were non-interest bearing.
In the third quarter, public sector external debt rose by 8.8 percent to $86.88 billion from $79.83 billion in the second quarter, accounting for 62.2 percent of the total.
The increase was driven by $3.56 billion in new loans and $2.17 billion in non-resident purchases of peso-denominated government debt. A weaker US dollar also raised the dollar value of public sector debt by $1.40 billion.
Of the total public sector debt, $80.13 billion (92.2 percent) came from the national government, while $6.76 billion (7.8 percent) was attributed to government-owned and controlled corporations, financial institutions, and the Bangko Sentral ng Pilipinas.
Private sector debt also climbed by 4.8 percent to $52.76 billion in the third quarter of 2024 from $50.36 billion in June.
This growth was primarily due to local banks raising $2.52 billion in offshore markets to meet funding needs and expand assets.
Non-residents’ net purchases of offshore debt securities worth $599.04 million and currency adjustments adding $163.40 million further boosted private sector debt.
Japan is top creditor
Japan ($15.38 billion), the Netherlands ($4.61 billion), and the United Kingdom ($4.51 billion) were the country’s top creditors.
Loans from official sources, such as multilateral and bilateral creditors, made up the largest portion of the country’s total debt at $52.43 billion or 37.5 percent.
This was followed by bonds and notes at $47.61 billion (34.1 percent) and loans from foreign banks and financial institutions at $31.73 billion (22.7 percent). The remaining $7.87 billion (5.6 percent) was owed to suppliers and exporters.
In terms of currency, most of the debt was in US dollars, totaling $104.03 billion or 74.5 percent. Philippine peso-denominated debt amounted to $12.75 billion (9.1 percent), while Japanese yen debt stood at $10.91 billion (7.8 percent).
The rest, $11.96 billion (8.6 percent), was spread across 17 currencies, including $6.99 billion (5.0 percent) in euros and $3.87 billion (2.8 percent) in special drawing rights.
