National Government eyes options for $1.3-B funding needs

The National Government is seeking cheaper funding options for its projected $1.3 billion foreign borrowings for next year.

Finance Secretary Jose Isidro Camacho said government has already several funding options in place for more than half of its projected $1.3 billion external funding requirements for next year but wants to diversity into other sources for cheaper funds.

Specifically, government wants to negotiate for yen and Singapore-dollar based financing sources.

At the same time, it will also double the use of official development assistance (ODA) creditors and focusing on credit enhancements through loan guarantees from the Japan Bank for Internal Cooperation (JBIC), Nippon Export and Investment Insurance (NEXI) and the World Bank.

Camacho said any residual borrowing requirements will be met through domestic sources.

Previously, Camacho said that its 2001 funding requirements have already been fully funded completing private placements totalling $250 million.

Finance officials said the government wants to complete its borrowings as early as possible as it anticipates spreads on emerging markets’ sovereign borrowings to widen with the uncertainty brought about by the recent terrorist attacks against the US.

The International Monetary Fund (IMF) downgraded its forecast for global growth to 2.6 percent as two of the world’s biggest economies, Japan and the US, are not expected to post their much-anticipated recoveries. Most emerging markets are largely dependent on these two countries for their own growth as the US and Japan are the biggest consumers of their products.

Camacho said that by focusing on credit enhancements such as loan guarantees, the Philippine government can complete its financing requirements while minimizing interests costs.

The guarantee component by either the WB, JBIC and NEXI makes it attractive for lenders to extend borrowings.

For instance, NEXI guarantees 90 percent of loans while JBIC can guarantee up to 956 percent.

Shortly, government will be choosing from several proposals to do its planned issuance of $500-$800 million bonds in the Japanese market.

Earlier, 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 issuance.

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 Mizuho, Nomura Securities, Fuji Bank, Bank of Tokyo-Mitsubishi and, Daiwa-Salomon Smith Barney.

Sources said Fuji Bank is emerging as the likely choice.

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

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 terrorist attacks on the US.