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NEWS UPDATES Asean Affairs             16  July 2011

Philippines completes second bond swap

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The Aquino administration has completed its bond-exchange program, issuing over three times its original offering to extend the maturity of government debt.

In a statement, Finance Secretary Cesar Purisima on Friday said they finished the domestic bond exchange with total accepted tenders of P292.5 billion. This was the second such debt swap under the Aquino administration, and the biggest out of the last five such offerings.

National Treasurer Roberto Tan said the government had to issue additional bonds worth P31 billion to cover the difference in the exchange between the existing IOUs and the new securities that will be issued for a total of P323.5 billion in new debts.

The government earlier announced that it would issue a minimum of P50 billion of 10.5- and 20-year bonds.

"The success of this bond exchange will further strengthen the fiscal position of the republic as short and medium term debt will be swapped for longer dated securities. It also reaffirms the growing investor confidence in the country's long term prospects," Purisima said.

In exchange for the P292.5 billion of eligible bonds tendered by investors, the government on July 19 will issue P67.6 billion in 10-year bonds that would fall due in January 2022, as well as P255.8 billion in 20-year bonds that will mature in July 2031.

The bond swap is part of the government's plan to smoothen its debt maturity profile, extend the maturity of existing peso-denominated liabilities and establish liquid benchmarks at the long end of the yield curve.

Purisima said that transaction substantially reduces the bunching of the government's debt maturities, particularly in the medium term, and significantly mitigates its refinancing risk. The transaction achieved cash flow and debt service relief of P152.6 billion in the medium term. The government intends to channel the savings to infrastructure and socio-economic projects.

The bond swap extended the average maturity of the portfolio of eligible bonds by 37.9 percent, or approximately 2.08 years with the extension of the average maturity of accepted bonds from 5.48 to 18.01 years.

The government set coupon rates for the 10- and 20-year IOUs at 6.375 percent and 8 percent, respectively.

These bonds, along with the 25-year bonds issued last December, will serve as benchmarks for long-term financing in line with government initiatives to promote Public-Private Partnerships in infrastructure projects and the development of capital markets.

Joint deal coordinators for the bond exchange were state-run Development Bank of the Philippines and Land Bank of the Philippines.

The six institutions that formed part of the consortium of deal managers include BPI Capital Corp., Citicorp Capital Philippines Inc., First Metro Investment Corp. and SB Capital Investment Corp.


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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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