Government to speed up $500-M Shibosai deal

After securing a guarantee from Nippon Export and Investment Insurance (NEXI) for its proposed $500-million private placement with Japanese corporations, National Treasurer Sergio Edeza is proceeding to Japan next week to speed up the Shibosai transaction.

Edeza was authorized by Finance Secretary Jose Isidro Camacho to negotiate for the final terms of the initial issuance of 30 to 50 billion yen worth of Shibosai bonds, the transaction of which will be used to partially fund government’s financing requirements for 2002.

Earlier, Camacho named Fuji Bank and Nomura Securities as joint-lead managers and Daiwa Securities SMBC as co-lead manager for the initial issuance of 30 to billion bonds.

Fuji Bank and Nomura Securities bested other contenders that included ING Merrill Lynch, Daiwa Securities, Nikko Salomon, Deutsche Bank Mizuho, Bank of Tokyo-Mitsibushi and, Daiwa-Salomon Smith Barney.

The bonds will be guaranteed by the Nippon Export and Investment Insurance (NEXI), which should be favorable to the Philippine government since this would translate into cheaper borrowing costs.

With a NEXI guarantee, the Shibosai bond spread will go down considerably to 130 basis points up to 150 basis points. NEXI is a quasi-government insurance company.

Tapping the Japanese bond market is one of several options the government is looking at to raise its projected $1.3 billion foreign borrowings for next year.

While more than half of its projected $1.3 billion external funding requirements for next year are already covered, government wants to diversify 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) credits and focusing on credit enhancements through loan guarantees from the Japan Bank of Internal Cooperation (JBIC), NEXI and the World Bank.

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

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. – Rocel Felix