RP open to another global bond issue

MANILA, Philippines - The Philippines is still open to issuing another global bonds, possibly later in the year to complete its remaining $1-billion external financing requirements, Finance Undersecretary Rosalia de Leon said yesterday.

The government has increased its 2010 financing requirements by roughly $500 million. It is now looking at borrowing $2.5 billion from foreign commercial creditors from $2 billion previously. It is maintaining the program to borrow $1.8 from multilateral lenders.

De Leon said that after raising $1.5 billion from a global bond sale last week, the government still needs to complete the remaining $1 billion which may be done through the issuance of Samurai bonds or yen-denominated bonds.

However, she said that if the government is not able to complete the $1 billion from the sale of Samurai bonds, it may do another global bond offer.

“We may do another global bond issue but it doesn’t have to be in the first quarter of the year,” De Leon said.

De Leon said another global bond offer is one of the options the government is looking at to complete the $1 billion in financing requirements for 2010.

However, the Philippines and the Japan Bank for International Cooperation (JBIC) have yet to sign an agreement to guarantee the proposed Samurai bonds issue.

The government is looking at issuing at least $500 million in yen-denominated bonds.

Samurai bonds are yen-denominated bonds issued in the Japanese financial market by a foreign government or company.

In June last year, the Philippines and JBIC signed a memorandum of understanding (MOU) for the planned Samurai bonds issue.

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

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 ¥50 billion.

The government is raising funds to plug its swelling budget deficit.

The government expects the budget gap for the whole of last year to fall below P300 billion. This year, it expects the budget deficit to reach P293 billion, above the initial estimate of P233.4 billion.