Companies’ global debt may exceed estimates: Philippines

BLOOMBERG 

The Philippine central bank plans to require the nation’s largest business groups to disclose their foreign-debt levels due to concern their exposure may be bigger than currently estimated.
The monetary authority aims to send out requests in the next three to six months as it seeks to head off any potential risk to the Southeast Asian nation’s economy, according to Bangko Sentral ng Pilipinas Governor Felipe Medalla.
“I don’t think we are fully informed about the external exposure of our conglomerates,” Medalla said in an interview. “When we look, for instance, at other data it seems to us that their exposure may be larger than we think it is. It’s about understanding the economy and being vigilant.”

Cheap Capital
Philippine-listed companies have been increasing their reliance on cheap borrowed capital, according to S&P Global Ratings. Pressure though will mount on the firms to service or refinance that debt due to rising global interest rates, and with the peso weakening 4.5% against the dollar over the past 12 months.
The changing macro environment may be one reason why the central bank is now exercising the amended New Central Bank Act enacted in February 2019, which gives it the right to require local firms to disclose their debt exposure. “We will be writing letters to the important companies and say, can you please fill up this form. Now, will they tell us? I think they will,” Medalla said.
At present, the central bank’s prior approval is required for private-sector foreign borrowings only if they are government guaranteed.
Companies taking out loans without a state guarantee only have to notify the central bank, and register if they plan to
buy foreign currency from the banking system to service the loan. The nation’s largest 25 listed companies, excluding financial firms, each have at least 100 billion pesos of total debt, according to the data compiled by Bloomberg show.