Government starts sale of P300-B bonds

MANILA, Philippines - The government said yesterday it has launched the issue of 2025 and 2040 domestic bonds to improve its liquidity and generate savings.

The offer, which began on Wednesday and will run until Sept. 4, is meant to allow bondholders of eligible government securities to swap their bonds for shorter dated securities.

National Treasurer Roberto Tan told reporters the government would offer a minimum P50 billion for each tenors, out of the maximum issue size of P300 billion.

The 10-year bonds will have a minimum coupon rate of 3.625 percent, while the 25-year papers will carry a 4.625 percent rate. Tan said the pricing of debt papers will be determined on Sept. 7.

Holders of government securities maturing between Nov. 25, 2015 and Nov. 11, 2024 and between April 4, 2025 and Oct. 24, 2037 can participate in the swap.

Tan said the government is confident on the take-up of the offering given recent “good feedback” from both institutional and retail investors.

“We are confident that, with the unwavering support of the GSEDs (Government Securities Eligible Dealers), this domestic liability management exercise by the government can be executed successfully,” Tan said.

“The transaction will benefit both investors, who can exit into liquid benchmark securities, and the government, which can attain its debt management and capital market development objectives,” Tan said.