RP open to raising Samurai bonds sale to $1 billion

MANILA, Philippines - The Philippines is open to selling as much as $1 billion worth of Samurai bonds if the market appetite is good, Finance Secretary Margarito Teves said yesterday.

“We are open to selling up to $1 billion worth of Samurai bonds depending on market appetite of investors, market conditions and our cash flow,” Teves said.

If on the other hand, the government is unable to raise $1 billion from the sale of Samurai bonds, it can also sell euro-denominated or dollar-denominated bonds to fill the gap.

He said in an earlier interview that the actual issuance may take place in the third week of February, with an investors’ roadshow slated in the first week of next month.

Initially, the government is looking at issuing at least $500 million worth of Samurai bonds with a tenor of five years.

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 Japanese ¥50 billion.

Early this month, the government sold $1.5 billion in dollar-denominated bonds, making it the first Asian sovereign debt issuer for 2010.

Following the sale of $1.5 billion in dollar-denominated bonds, the government still needs to raise $1 billion to complete its commercial borrowing requirements for the year.

Fiscal authorities earlier revised the borrowing program for 2010 and are now looking at raising $2.5 billion from foreign commercial creditors from a previous program of $2 billion but maintained the plan to borrow $1.8 billion from multilateral lenders.

The government is raising funds to plug its budget deficit which already hit P272.5 billion as of end-November 2009.

Yesterday, Teves also maintained that the full-year deficit is likely to hit P290 billion this year, above the ceiling for the year of P250 billion and below the previous estimate of P300 billion for 2009.