The loan was syndicated by a group of mandated arrangers led by HSBC, HSH Nordbank AG, Standard Chartered Bank, Mizuho Corporate Asia (HK) Ltd., Sumitomo Mitsui Banking Corp., DBS Bank Ltd. and Mitsubishi Securities (HK) Ltd.
Mitsui general manager Toshiro Kubota said the success of the term loan facility was significant since it was signed so close to the May elections when the political situation was most liquid.
"Despite the fact that political uncertainty loomed over the market at the time, the syndication of the facility was successfully achieved with overwhelming support from a total of 21 top international and domestic banks," Kubota said.
He added that the success of the term loan generated strong market support. "It’s definitely a clear testimony and a vote of confidence to the stability and economic well-being of the BSP and the republic," he stressed.
The BSP borrowed $500 million to refinance its maturing obligations and fund its requirements for the rest of the year. The BSP said the loan structure could be a three-year bullet repayment or a five-year amortizing loan with an average life of three years.
"The proceeds of the new loan will be used for refinancing and general funding requirements of the BSP," the central bank said.
The BSP said it had no need to go to the credit market for its own funding requirements until the third quarter of the year, but officials said the success of the National Power Corp. (Napocor) and the National Government (NG) in their borrowings had opened a window for the BSP’s own borrowing effort.
BSP deputy governor Amando Tetangco said the BSP has already pre-funded some of its requirements late last year but its borrowing strategy was opportunistic.
The BSP has been pressing the NG to grab every opportunity to borrow from the international market before the May elections as its gross international reserves are slowly being depleted due to debt service requirements.
In addition to the 2004 gross deficit of $3.7 billion, the NG also has maturing obligations of $3.9 billion consisting of $2.2 billion of principal and $1.7 billion in interests.
Under the government’s $7.6-billion borrowing program, it planned to raise about $5.3 billion of the total through domestic borrowing and only $2.3 billion would be sourced through foreign borrowing.
This leaves a foreign exchange funding gap of $1.6 billion if the government decides to use funds from project loans and a gap of as much as $2 billion without the project loans.