THE GOVERNMENT will find conditions suitable should it proceed with a plan to sell yuan-denominated debt papers this semester in order to diversify funding sources further, according to a senior executive of First Metro Investment Corp. (FMIC).

“At the end of the day, it depends on their willingness to go through it,” Christopher Ma. Carmelo Y. Salazar, FMIC senior vice-president and group head of financial markets, said in an interview on the sidelines of the investment bank’s mid-year economic briefing on Thursday last week.

“When they see that there’s good opportunity, I think they can.”

Finance Secretary Carlos G. Dominguez III in April bared his proposal to issue debt notes in the Chinese currency within the “third or fourth quarter” of 2017, involving three- and five-year tenors worth $200 million.

Mr. Salazar said current market rates are supportive should the government decide to wade into this market, with borrowing costs creeping up but at a moderate pace.

“Interest-rate wise, it’s still conducive and it’s not really so high. In terms of getting funding… given that yields are still there and are just on the way up, it’s still pretty much conducive even for corporate issuers,” Mr. Salazar said.

Monday’s auction of 91-day Treasury bills saw average yield rise to 2.126%, up by 4.2 basis points from the 2.084% rate fetched last June 19.

Mr. Salazar said raising capital through the Chinese market will allow the Philippines to “diversify” its funding sources, reducing exposure to any one issuer.

The Philippine government is looking to borrow up to P727.64 billion this year, higher than the P631.294-billion previously programmed, in order to support a planned surge in public spending for infrastructure and social services.

The government plans to spend about P847.22 billion this year on infrastructure alone, equivalent to 5.32% of gross domestic product (GDP), as part of its “Build, Build, Build” program to disburse a total of P8.44 trillion for this purpose from 2017 to 2022, when the current administration ends its term. In 2022, spending on infrastructure alone should hit P1.899 trillion, equivalent to 7.45% of GDP.

National Treasurer Rosalia V. De Leon earlier said that the 2017 borrowing schedule does not factor in the plan to issue “panda” bonds, citing the need to assess “emerging developments” in China, which is undergoing economic rebalancing from investment- to wage- and consumption-led growth, as well as the technical requirements of setting up the new borrowing platform.

Next year will see the country’s borrowing needs jump by more than a fifth to P889.72 billion, with 80% of the amount to be sourced from domestic sources. — Melissa Luz T. Lopez

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