While finance officials declined to confirm specific details of the plan, wire reports revealed disclosure statements filed at the US Securities and Exchange Commission, indicating that the government had mandated Citigroup, Credit Suisse First Boston, Deutsche Bank and UBS to arrange the issue.
The National Government would still require authorization and clearance from the Bangko Sentral ng Pilipinas (BSP) but central bank officials are also mum on the issue.
The market, however, is rife with rumors that the government intends to issue the bonds to help refinance its maturing obligations and fund part of its budget deficit for 2006.
An official at the Department of Finance (DOF) only said that the government would make a formal announcement when plans are finalized.
"We’ll issue a formal statement when it’s allowable for us to do so," said the official.
For 2006, the Arroyo administration plans to borrow about $3.9 billion from the foreign credit market although BSP officials said it could afford to borrow less from overseas given the country’s rich reserves.
The last time the government was in the international bond market was in September last year when it sold $1 billion worth of global bonds due in Jan. 2016 to partly fund its budget gap for 2005.
Finance officials have been carefully mum on their borrowing strategy this year but the government’s first foray into the foreign credit market might be earlier than expected to take advantage of the market’s enthusiasm over the country’s improving prospects.
Although the Development Budget Coordinating Committee (DBCC) has not changed the official foreign borrowing program for the year, finance officials said the timing and the sizes of the individual borrowing would be flexible depending on market conditions.
The biggest worry, however, remains the emerging political climate as preparations for the 2007 elections start building up towards the end of the year, possibly affecting market sentiments.
National Treasurer Omar Cruz earlier said the beginning of the year is the optimal time for the government to explore its options in the foreign credit market but he declined to disclose if the government already has specific plans to borrow.
For the whole of 2006, the government has announced it will raise at least $4 billion in foreign borrowing, largely unchanged from its 2005 program where the government raised over $3 billion from its foreign creditors.
According to Cruz, however, there are indications that the market would react favorably should the government decide to tap its credit sources this early.
"I have to see the market, crunch some numbers," said Cruz. "But right now, I think you’d agree, that the foreign market is very much in our favor," he said.
Cruz admitted that with the elections scheduled in 2007, the government would have to carefully read the market and how sentiments would react to the usual increase in political noise as campaigns start.
At present, Cruz said the conditions appear optimal but he declined to reveal whether discussions have started on specific plans to borrow.