RP to borrow $1.7 B this year

The Philippine government wants to increase its borrowings to $1.9 billion this year, from $1.7 billion last year, according to Finance Secretary Jose T. Pardo.

The government is about to secure $1.7 billion through a Global bond offering, which has reportedly been oversubscribed by $750 million.

Of the $1.7 billion, Pardo said, $700 million will be used to fund the National Government's expenditures, $500 million for new money and $500 million for restructuring old debt papers of the National Power Corp. Government has reportedly set the price for the Global bonds but there is no official announcement yet.

Market reports indicate that the Philippine Global bonds might carry a spread of up to 365 basis points over the comparable US Treasuries.

On top of the $1.7 billion, Pardo revealed that the government plans to raise another add $200 million to finance the Philippine National Oil Co.'s 10-percent stake in the Malampaya natural gas project in Palawan. Government, Pardo said, plans to add $200 million to the current offering. This, he said, may need a mandate from the Bangko Sentral ng Pilipinas.

If the additional $200 million cannot be included in the present offering, government may have to do a separate $200-million PNOC bond float at a later date, he added.

Pardo was relieved that in spite of the still continuing controversy and problems at the Philippine Stock Exchange (PSE), the government was able to "arrest" any more adverse impact on the Global bond float.

Pardo noted that investors apparently realized that in spite of some problems, the country's economic fundamentals remain good.

Even the International Monetary Fund, the international economic watchdog, apparently extended such assurance, noting that all other macroeconomic fundamentals remain good.

Finance Undersecretary Joel Bañares and BSP Director for Economic Research Diwa Guinigundo are in New York trying to conclude the bond offering.