BSP to seek $400-M club loan after all

The Bangko Sentral ng Pilipinas (BSP) is considering pushing through with its earlier plan to acquire a $400-million club loan.

BSP Governor Rafael Buenaventura said the BSP could revisit the shelved $400-million club loan which was put off last year because of higher premiums being asked by investors.

"We are trying to open that window. What we’re doing now is try to see if the banks can give us good spreads while trying to get other banks interested in extending the loan," Buenaventura said.

If talks with banks fall through again, Buenaventura said the BSP might dip into the country’s gross international reserves.

A club loan is a loan provided by a group of banks much like a syndicated loan but with no lead underwriter or lead manager.

Normally, the BSP tries to borrow funds when it is not yet needed so that it can get the best price. However, with the political uncertainty arising from the impeachment trial, banks have been reluctant to extend loans to the Philippines.

Earlier, Buenaventura said the club loan would be put in the back burner until interest rates go down.

Foreign investors have been demanding higher premiums for their exposure to sovereign debt instruments issued to emerging markets as implied by the widening spread last year over benchmark US treasuries. – Rocel C. Felix