BSP Governor Rafael Buenaventura said over the weekend that the BSP has already informed the banks that it is now accepting proposals for its September borrowing.
According to Buenaventura, the BSP has no clear plan on whether it would raise the funds through a loan or bond offer, adding that it would depend on what proposals would be attractive enough.
"If the price is good, we’ll take. If not, we’ll wait," Buenaventura said, explaining that the planned borrowing was only precautionary since the BSP has the reserves to refinance the maturing obligation.
The BSP had originally planned to pay the obligation out of its reserves but the recent volatility of the peso, aggravated by the surge in imports and increase in interest expense have changed the balance between the need to refinance obligation while preserving a comfortable reserve.
Under the circumstances, Buenaventura said the BSP would borrow instead of dipping into its reserve.
The BSP was earlier planning to tap the market for $500 million sometime in September to beef up its international reserves as well as pay for its maturing obligation and prefund part of its 2004 requirements.
Buenaventura said the BSP was looking at three to five-year loans since the BSP had an opening in 2006. To avoid bunching up maturing loans in a single year, he said the maturity would have to fall on a year of the least amount of scheduled maturity for existing obligations.
Buenaventura said the BSP had scheduled maturities this year as well as next year and the earliest open year was 2006 and 2008 so that the central bank could tap loans that would mature in one or both of these years.
"We thought it would be prudent to borrow just to anticipate the slowdown in foreign direct investments next year," Buenaventura pointed out. "If there is a shortfall, we would be prepared."
According to Buenaventura, the BSP could anticipate the outflows for 2004 but inflows were a little more erratic since foreign direct investments depend largely on prevailing market sentiments.