NG sells $1.05-B global bonds

Encouraged by the reception of the market, the government raised its global bond issue from $500 million to $1.05 billion, enough to finance its requirements for the rest of the year and pre-fund part of its 2004 budget.

The government sold $750 million of its 2014 bonds and $300 million of its 2025 bonds million through its joint lead managers Hong Kong and Shanghai Bank, Morgan Stanley and UBS Warburg.

Finance Secretary Jose Isidro Camacho said the reaction of the market to the initial $500 million offer was so strong that the government decided to increase the volume and open an additional $300 million worth of bonds maturing in 2024.

According to Camacho, the government was also satisfied by the prices of the two bond floats. He said the proceeds filled up the $1 billion that the Department of Finance wanted to raise before the end of the year.

"The proceeds will be used to fund the republic’s remaining $250 million requirement for the year, and partially to meet next year’s financing requirement," Camacho said.

This latest borrowing adds another $1.5 billion to the country’s total outstanding external debt. As of June this year, the volume had increased by $300 million to $56.1 billion as the peso depreciated against the dollar and the Euro during the second quarter of the year.

According to the Bangko Sentral ng Pilipinas (BSP), the increase was attributed mainly to foreign exchange revaluation adjustments arising from the strengthening of most third currencies against the dollar, particularly the Euro which accounted for 45 percent of total adjustments.

BSP officer in charge Alberto Reyes said the loan transactions during the period resulted in net repayments of $500 million. However, he said the downward impact of this development on external debt level was negated by a $600-million reduction in residents’ holdings of Philippine debt papers.

"The increase in debt stock was not a result of new borrowings but of secondary market trading of the instruments," Reyes explained, adding that these investments were classified as domestic accounts and were therefore excluded from external debt figures.