The country’s foreign debt surged 17.5 percent to $139.64 billion as of end-September 2024 from $118.83 billion a year ago, the Bangko Sentral ng Pilipinas said over the weekend.
It said the external debt level also increased 7.3 percent from $130.18 billion registered as of end-June 2024.
“Despite the increase in the debt stock, the external debt ratio [EDT expressed as a percentage of gross domestic product] remains at a prudent level, recording at 30.6 percent from 28.9 percent last quarter,” the BSP said.
It said other key external debt indicators also remained at sustainable levels. Gross international reserves (GIR) reached $112.71 billion as of end-September 2024 and represented 3.92 times cover for short-term (ST) debt based on the remaining maturity concept.
The debt service ratio (DSR), which relates principal and interest payments (debt service burden) to exports of goods and receipts from services and primary income, rose to 11.6 percent from 10.4 percent in the same period last year due to the higher recorded debt service payments from January to September 2024.
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 rise in the country’s external debt was largely driven by the liquidity requirements of the public and private sector as well as the increase in non-residents’ investment appetite for onshore debt securities,” the BSP said.
It said the national government (NG) raised an aggregate of $4.17 billion in the third quarter, headlined by its $2.50 billion triple tranche fixed-rate global bonds issuance.
It also raised $1.44 billion from official creditors to finance its various development programs/projects.
Private sector corporations also sought the offshore market to expand their funding base and augment their working capital with its net availments for the quarter aggregating $1.82 billion.
Meanwhile, investor preference to seek yields in emerging market debt securities amid anticipation of a US Federal Reserve rate cut in September 2024 and weakening of the US dollar during the third quarter resulted in the $2.77 billion net acquisition by non-residents of Philippine debt securities.
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. Negative prior periods’ adjustments slightly tempered the increase by $248.77 million.
The BSP said the debt stock rose 17.5 percent year-on-year, driven by total net availments by both public and private sector borrowers as well as the net acquisition of Philippine debt securities by non-residents.
Public sector net availments for the 12-month period were recorded at $7.94 billion while private sector borrowers accumulated net availments of $6.63 billion in the same period.
