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NEWS UPDATES 21 July 2010

Philippine eyes shorter-dated global bonds

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THE Aquino administration plans to borrow money from foreigners on three- to five-years’ notice, instead of the 25-year tenor announced earlier, the Bureau of Treasury told the Manila Times

Citing his correspondence with partner banks, National Treasurer Roberto Tan said offshore investors have an interest in the five-year tenor for the Philippines’ planned peso global bonds.

“[The] Philippines has received advice from banks that a global peso bond issue with a maturity of at least five years is feasible, but the government will likely sell retail treasury bonds first,” he said.

When asked whether the government would shelve a plan to issue 25-year debt papers, Tan said, “When we deal with foreign investors we cannot make a sudden shift, there are stages that have to be observed.”

He said the government would have to take into consideration the yield that investors would demand since the longer the tenor, the higher interest rate should be borne by the issuer.

He said that the retail Treasury bonds (RTBs) would come ahead of the peso-denominated global bonds, as the government has to refinance its maturing debts in August.

The government has to shell out P75.23 billion next month in principal payments. The maturing debts pertain to P 36.47 billion worth of three-year debt papers, and P38.76 billion of five-year IOUs.

Tan said the government would float a minimum of P20-billion to P30-billion worth of global bonds with tenors ranging from three to 10 years.

Tan said the government would no longer open a tap facility for the excess demand.

“We have too much money already,” he said.

The national treasurer attributed the lower rate to the Bangko Sentral ng Pilipinas’ decision to keep the key interest rates at 4 percent and 6 percent for overnight borrowing and lending, respectively.

He said the lower June inflation of 3.9 percent and other positive economic indicators contributed to tighter bids.

Government’s due and demandable debts for the week stands at P14. 7 billion.

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