No more global bond issues this year - Tan

MANILA, Philippines - The government said it was no longer considering issuing global bonds this year.

National Treasurer Roberto Tan said that if ever the government decides to pre-fund next year’s requirements, it would likely raise the money through the issuance of Samurai or yen-denominated bonds. The term Samurai bonds is used to describe bonds that are issued in the Japanese financial market by a foreign government or company.

“It seems that (the issuance of global bonds) is out of the picture,” Tan told reporters yesterday.

Last month, the government successfully sold $750 million worth of dollar-denominated bonds in addition to $1.5 billion issued last January.

Finance Secretary Margarito Teves has said the government may issue global bonds for the third time to pre-fund next year’s requirements. He said Samurai bonds or yen-denominated bonds is the government’s preferred option.

“Most likely, if ever it happens, it could be the Samurai bonds,” Tan said.

The Philippines and Japan Bank for International Cooperation (JBIC) earlier signed a memorandum of understanding for the proposed Samurai bonds.

Under the MOU, JBIC would guarantee 95 percent of the present value of all principal and interest payments.

The Philippines last tapped the Japanese capital market in 2001 with the issuance of Shibosai bonds, also a form of Samurai bonds, amounting to ¥50 billion.

For now, the government is negotiating with the Japanese lender to lower the guarantee fees.

The government borrows from local and foreign lenders to finance its budgetary requirements.

The Development Budget Coordination Committee (DBCC), the interagency group that sets the country’s macroeconomic assumptions, has revised the 2009 deficit ceiling to P250 billion from the previous programs of P199.2 billion, P177 billion and P40 billion.