RP completes debt portfolio clean-up via bond swap

The Arroyo went over its programmed debt service spending in the first quarter of the year as treasury officials completed the clean-up of the government’s debt portfolio with a series of bond swaps.

Data from the Department of Finance (DOF) indicated that the government spent a total of P175.58 billion in the first three months of the year compared with the programmed amount of only P172.815 billion.

The bond swaps allowed the government to replace more expensive borrowings with cheaper money but increased the actual principal payments scheduled for the first quarter.

DOF data show that the government paid a total of P89.149 billion in interest payments on existing obligations, about P5.1 billion less than the programmed interest payments of P94.255 billion.

The DOF said interest payments on domestic debt amounted to P39.644 billion, about P11.5 billion less than the government originally expected to pay during the period. The programmed amount was P51.139 billion.

On the other hand, interest payments on foreign obligations amounted to P49.505 billion during the period, P6.3 billion more than the programmed amount of P43.115 billion.

The finance department reported that the government made principal payments amounting to a total of P86.431 billion, exceeding the programmed amount of P78.558 billion by P7.872 billion.

Domestic principal payments amounted to a total of P70.486 billion, about P8 billion over the programmed amount of P62.405 billion. But foreign principal payments were P200 million less than the programmed amount at P15.945 billion.

It was during the first quarter when the Arroyo administration swapped some P88.6 billion ($1.84 billion) worth of local bonds in various maturities with benchmark three-year and five-year bonds.

The Bureau of the Treasury said the size of the three-year and five-year benchmark bonds, which amounted to approximately $1 billion, would make both benchmark bonds significant issues in the Philippine domestic market.

The BTr had offered to swap outstanding Philippine government securities maturing between March 1, 2007 and Feb. 21, 2012 for new three-year worth P30 billion and five-year bonds worth P20 billion.