8 firms offer to manage $500-M bond issue

The government has received at least eight firm proposals to manage its planned issuance of $300-$500 million bonds in the Japanese market.

In another development, government expects to get loan proceeds totalling $350 million in private placements by Credit Suisse First Boston (CSFB) and Citibank N.A., possibly by next month, which will help plug this year’s budgetary shortfall of P145 billion.

National Treasurer Sergio Edeza said that while government has not yet firmed up the terms of the yen-dominated bonds, there are now eight parties jostling for the contract to undertake the bond issue.

Those which expressed interest to do either a Samurai bond (public bond offer) or Shibusai (private placement) are ING Merrill Lynch, Daiwa Securities, Nikko Salomon, Deutsche Bank Misuho, Nomura Securities, Fuji Bank, Bank of Tokyo-Mitsubishi and Daiwa-Salomon Smith Barney.

The government has not yet decided whether to do a Samurai bond or Shibusai, although it wants a maturity of up to 10 years.

"We are targeting all possible sources of foreign funding that could come in before the end of the year," Edeza said.

Previously, Finance Secretary Jose Isidro Camacho said the issue would be separate from the bond float worth at least $500 million which the government had been considering for this year, but which it was forced to put off because of unfavorable market conditions that were aggravated by the recent terrorist attacks in the US and the consequent uncertainty as the world’s superpower retaliates against its alleged attackers.

A Shibusai float is marketed to a limited number of investors unlike Samurai bonds which are sold openly in the Japanese market.

Last year, the government issued $330 million in Samurai bonds to finance the budget deficit. It also issued $200 million in Shibusai bonds to raise funds for the state-owned Philippine National Oil Co.