Gov't plans to tap Japanese market for $700-M bond offer

The government plans to tap the Japanese market for its planned $700- million bond to finance the projected P62.5-billion budget deficit and pay maturing obligations, Finance Secretary Jose Pardo said over the weekend.

Pardo said the government was supposed to tap the European market by issuing Euro-denominated bonds in June but European interest rates have gone up in reaction to the rise in US interest rates. Even the proposed roadshow for the bond offering might no longer push through next month as earlier planned.

While the Finance Department has already obtained the presidential approval for the Eurobond offering, Pardo said the department has yet to get a new one for the planned issuance of bonds in Japan. He said issuing bonds in Japan is still relatively cheaper compared to the spreads in US and in Europe.

The Euro market, he said is a second option after the government decided to junk its plan to issue bonds in the US. The interest rate on Philippine debt papers being traded in the US has gone up due to the conflict in Mindanao and the controversies hounding the equities market after it was reported that owners of BW Resources headed by Dante Tan have manipulated its prices.

"After we decided that we would not go back to the dollar global bond, we decided that Europe and Japan are the next options. After we got the presidential approval, we thought we would do a Euro. But spreads (in Europe) are widening. It is not timely to issue the bonds there. We are holding it back," Pardo said.