Global bonds mulled for 'Ondoy' victims

MANILA, Philippines - A third global bond this year may come ahead of the planned Samurai bond issuance as the government needs to secure immediate funding to help victims of tropical storm “Ondoy” and rehabilitate affected areas, Finance Secretary Margarito Teves said yesterday.

“Given the emergency situation, our preferred route is borrowing,” Teves told reporters after a budget hearing at the Senate.

Teves said there was a need to cover the proposed P10-billion calamity fund immediately. The proposed supplemental budget was discussed Tuesday night in a meeting among lawmakers and some Cabinet officials.

During the government’s recent no-deal roadshow in New York and London, investors encouraged the Philippines to tap the global bond market again, noting the country’s steady growth despite the challenging economic environment.

The third global bond, if the government pushes through with it, comes after the $1.5-billion bond sale in January and the $750-million sold in July.

In a separate interview, Finance Undersecretary Rosalia de Leon said the government is not giving up on another fund-raising option which is through the issuance of Samurai bonds or yen-denominated bonds to be guaranteed by the Japan Bank for International Cooperation (JBIC).

She said the Philippine government is still negotiating with JBIC to lower the guarantee fee.

“We want to diversify our investor base,” De Leon said.

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

Teves conceded that the proposed calamity fund may bloat this year’s budget deficit by P10 billion.

“We might increase our borrowings by P10 billion to accommodate what is needed by the country,” Teves said.

On the other hand, the Finance chief said that if the entire amount would be released in tranches, the supplemental budget “may not necessarily bloat the deficit.”

“Entire road projects can’t be implemented right away so it may not necessarily bloat the deficit by P10 billion when the year closes,” Teves said.

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. The DBCC revised the deficit program for the year due to the prolonged impact of the global financial turmoil.