Government seeks ADB guarantees for foreign loans

The Department of Finance (DOF) is set to ask the Asian Development Bank (ADB), one of the country’s biggest multilateral creditors, to provide guarantees for the foreign borrowings of the National Government, including the National Power Corp.’s estimated $1-bilion foreign funding requirements for the year.

Finance Secretary Jose Isidro Camacho said government will revive a previous offer of the ADB to guarantee the country’s commercial papers, bonds and other debt instruments that will be issued in the international debt market.

Credit enhancements such as loan guarantees, will boost the government’s chances of securing its financing requirements since this will be more attractive to investors.

At the same time, it will allow the government to complete its financing requirements for this year while minimizing interests costs.

The scheme being sought by the DOF is similar to what the Arroyo administration asked from the World Bank during the President’s state visit to Washington DC late last year.

Aside from the WB, the Japan Bank for Gov’t seeks… From Page 17

International Cooperation is also being sought for a guarantee on the country’s debt papers.

With more than half of its projected $1.5-billion external funding requirements for this year already covered, government wants to diversify into other, cheaper sources of funds.

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

The government’s projected demand from the international debt market for this year, including those from official sources and commercial borrowings, is $2.8 billion.

It already frontloaded ¥50 billion or about $414 million out of the total commercial funding requirements of $1.5 billion. The 10-year Shibosai straight bond issue was credit enhanced by NEXT.

Last week, government launched a $750-million global bond issue, the proceeds of which will partially go into helping plug this year’s budgetary shortfall of P130 billion.

The National Government also recently raised $250 million for Napocor’s financial requirement this year, placed at about $1 billion. – Rocel Felix