Economic mission to precede GMA visit to Japan next week

The Arroyo administration is sending an economic team to Japan next week, ahead of the state visit, to talk with Japanese credit rating agencies, trade officials and financial authorities.

The Investor Relations Office of the Bangko Sentral ng Pilipinas (BSP) said yesterday that the team would be headed by Finance Secretary Jose Isidro Camacho, Trade Secretary Manuel Roxas II and Economic Secretary Dante Canlas.

The team would be holding meetings with their counterparts beginning this weekend in preparation for high level talks during the state visit on Dec. 2 to Dec. 6, 2002.

IRO executive director Corazon Guidote said meetings have been arranged between the team and the Japan Credit Rating Agency and the Japan Rating and Investments Inc.

Guidote said the Philippines has no problems with the Japanese credit rating agencies.All they also need is to be fully apprised of the economic developments in the country.

"They are actually more accustomed to the problems we have here and they understand the intricacies so we have less problems with them," Guidote said.

The Philippines is rated investment grade by Japanese credit rating agencies, unlike other credit rating agencies which are more difficult to please and more stringent in their classification.

Japan is still the country’s second biggest trading partner and the biggest bilateral donor country.

The Arroyo administration also has a pending plan to tap the Japanese bond market through the issuance of some $250 to $350 million worth of yen-denominated bonds to pre-fund its deficit for 2003.

The plan under consideration involves the issuance of either Shibusai bonds or Samurai bonds that would be guaranteed by the Nippon Export Investment Inc.

"The Japanese bond market has not been as affected by the recent volatility as the US dollar bond market," National Treasurer Sergio Edeza explained earlier. "It actually looks more stable and we only have to look at the rates to find out whether it will be worth our while."

The government last floated Japanese bonds in 2001 amounting to about $406 million also insured with Overseas United Loan Insurance (OULI) from Nippon Export and Investment Insurance (NEXI). The bonds have a 10-year maturity and a coupon rate of 1.83 percent.

The NEXI-OULI provides investors a fixed level of protection from political and commercial risks during the lifespan of the bonds, making risks substantially lower for investors while still offering attractive yields that are above comparable Japanese government bonds.

The bond was arranged by Fuji Bank Limited, Nomura Securities Co. Ltd. and Daiwa Securities SMBC Co. Ltd.

Last year’s Japanese bond issue was the Arroyo administration’s biggest issuance in the Japanese market with the longest tenor possible and at the lowest cost. Compared to previous Samurai bonds issued by the Philippine government, the cost of funds was trimmed by a broad margin of about 3 — 3.5 percent.