Government names managers for $250-M Eurobonds

The Department of Finance has named Deutsche Bank, Salomon Smith Barney and UBS Warburg as joint lead managers for the minimum $250-million worth of Eurobonds the government will issue to raise funds for debt-saddled National Power Corp. (Napocor).

The Eurobond issue will have a maturity of five years.

Finance Secretary Jose Isidro Camacho said the bond proceeds will partially cover Napocor’s $530 million funding requirements for this year.

He said government decided to borrow for Napocor to keep borrowing costs down. Had Napocor borrowed on its own, Camacho said the spreads would have been higher by about 50 basis points.

He added the final spread will be determined or fixed after the roadshow is launched this month to drum up interest for the bond float.

Camacho is leading a team that will go on a roadshow from Nov. 21 to 23 in key financial centers in Europe, including Milan, Italy; Frankfurt, Germany, Amsterdam in The Netherlands and London, England.

This will be the first Eurobond issue of the Arroyo administration. A $750-million bond was supposed to be issued in November last year but was shelved because of the political crisis spurred by the jueteng payoffs involving then President Joseph Estrada.

"I am more confident of getting a good response this time, and the chances of succeeding is better because there is no crisis, the country is stable on most fronts," Camacho said.

He added that even if government is unable to secure financing for the remainder of the required $530-million funding needs of Napocor, some of the power firms’ requirements can still be deferred.

He clarified that government has not abandoned an earlier plan to launch a $400-million bond issue. The finance chief said government is still proceeding with talks with underwriter Bear Stearns to finalize a package for the launch.

Earlier, it was said that the seven-year bond issue that was supposed to be underwritten by Bear Stearns was shelved because of unfavorable news about reinsuring assets of Napocor.

Napocor is facing financial difficulties. Earlier, it sought an extension of its deadline to comply with the conditions set by the Asian Development Bank (ADB) for the release of the second tranche of its $600-million Power Sector Reform Loan.