Gov’t hikes international bond program to USD 40 bn

The government raised the ceiling on its medium-term international bond program to USD 40 bn — up from USD 30 bn — on the back of recent sovereign credit rating upgrades, a senior government official tells EnterpriseAM.

The government doesn’t plan to max it out. The strategy is to issue annual external debt roughly equivalent to maturing obligations, minus USD 1-2 bn, to gradually bring the overall external debt load down, the source tells us.

The Finance Ministry plans to launch a USD 1 bn social bond issuance next FY as part of the expanded program. “Next year, we will focus more heavily on sustainable development issuances, as the budget is primarily centered on the social sector,” the source adds.

The plan: The ministry is targeting USD 3-4 bn in international bond issuances next FY, out of a wider USD 11.2 bn in total external loans and financing. Over the medium term, it wants to cut debt servicing costs — which currently eat up roughly 59% of tax revenues — down to around 35% of total state expenditures, and bring external debt-to-GDP to 17.8% by next June from 21.5% last year.

REMEMBER- The government issued around USD 3.5 bn in diversified international bonds this FY, including its USD 1 bn debut social bond This week, the official says. Roughly USD 500 mn remaining that could be tapped before June or postponed based on market conditions.