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October 06, 2022

Pandemic response over 20 months require new loans worth well over P1 trillion in today’s money

Loans contracted over a 20-month period to address the country’s COVID-19-related woes aggregate $22.364 billion.

These were government IOUs sold between April 2020 up to December 2021 and sold to so-called multilaterals because of the sub-market or concessional rates charged these instruments of debt.

These were also far larger debts than government planners estimated originally as the severity of the virus and the variants it bred severely tested the local health infrastructure.

According to DOF data, the bulk of the loans were taken up by the Manila-based Asian Development Bank, the World Bank, the Japan International Cooperation Agency (JICA) and the Export-Import Bank of Korea (KEXIM) who extended support financing in the hundred million and billion-dollar range.

A number of dollar-denominated ROP bonds attracting billions more and maturing between 2024 to 2045 were similarly sold during the period.

A $1.5 billion loan package becoming effective on April 27, 2020 under the COVID-19 Active Response and Expenditures Support or CARES program, for instance, was taken up by ADB.

This was on top of dollar-denominated sovereign bonds, or ROP bonds as they are known in the market, which raised another $1.350 billion carrying a 2.92 percent coupon due in 2045 and another ROP with coupon of 2.457 percent due on 2030.

China’s Asia Infrastructure Investment Bank (AIIB) took up $750 million of the bonds while JICA extended $936.78 million in two separate packages while KEXIM took another $100 million.

These and other sovereign contracted financing for the period aggregated $22.348 billion and on top of contracted financing sought earlier worth $200 million.

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