The Philippines is seeking Japanese support to help manage its growing debt as part of a broader effort to strengthen bilateral relations. The Department of Finance (DoF) is considering issuing yen-denominated samurai bonds in addition to or instead of traditional US-dollar bonds.

As of May, the country’s government debt had surged to 15.3 trillion pesos, about $264 billion, according to estimates from the Bureau of the Treasury. Manila plans to borrow an additional $3 billion this year as part of a $5 billion bond program that began in May. The current debt-to-GDP ratio exceeds 60%, according to the Treasury.

Recently, the DoF held discussions in Japan with Sumitomo Mitsui Banking Corporation and Nomura Securities to assess investor interest. The timing of the new bond issuance may depend on decisions by the US Federal Reserve regarding interest rates later this year.

The Philippines has previously accessed Japanese bond markets. In 2018, the Japan Bank for International Cooperation purchased part of a ¥154.2 billion (about $1.39 billion) samurai bond issuance by the Philippine government. The following year, the Philippines raised ¥92 billion (approximately $860 million) in samurai bonds across three tranches. In 2021, the country issued ¥55 billion in three-year, zero-coupon samurai bonds, its first zero-coupon offering in Japan, which attracted strong investor interest.

The current bond issuance effort is also influenced by recent geopolitical developments. In early July, the Philippines signed a defense agreement with Japan amid ongoing tensions with China over the South China Sea. This move reflects how economic and strategic interests are increasingly intertwined in the region. Additionally, President Ferdinand Marcos Jr.’s administration is encouraging investment in the country’s nickel reserves to support the growing demand for electric vehicle batteries. The Philippines is the world’s second-largest producer of nickel after Indonesia, according to Statista.