Government eyes foreign borrowings for 2005 requirements

With the National Power Corp.’s (Napocor) funding requirements now out of the way, the government is now open to more foreign borrowings to pre-fund its 2005 requirements.

The government has recently concluded its $1-billion global bond offer, raising enough funds to meet Napocor’s funding needs.

Finance officials said there were no specific deals in the pipeline but clearing Napocor’s funding requirements has paved the way for more borrowing for the remainder of the year.

Finance Undersecretary Eric O. Recto told reporters that being able to fund Napocor’s requirements has taken much of the pressure off the National Government.

"If ever we will do anything, it will depend on whether or not we see a good window in the market," Recto said. "At least the rest of the year is now open. As for pre-funding, who knows? We’ll keep watching."

According to Recto, the response to the governments recent global bond float had been "remarkable," prompting the government to expand the offer from the original $750 million to $1 billion.

A total of $300 million worth of the 2015 bonds with a yield of 8.875 percent were sold. A further $700-million worth of 2025 paper at 10.625 percent were also sold.

However, banking sources said the market reaction to the float was largely because the Philippines had priced its offer at levels that were more expensive than even lower-rated sovereigns like Venezuela and Brazil.

According to a banker speaking on conditions of anonymity, the nearest comparable issue was Venezuela’s 2027 bonds which carried 9.801 percent while Brazil’s 2027 bonds carried a rate of 9.804 percent.

"These are countries with even lower rating than ours," the banker said. "With our credit rating and selling bonds at yields even better than Venezuela and Brazil, of course the market will lap it up!"