RP may postpone issuance of Samurai bonds to early 2010

MANILA, Philippines - The Philippines may postpone the issuance of Samurai bonds to early 2010 if the government and the Japan Bank for International Cooperation (JBIC) won’t be able to agree on the price of the guarantee fees, Finance Secretary Margarito Teves said yesterday.

“We can have it next year,” Teves said when asked if the government would still push for the issuance of Samurai bonds this year.

JBIC agreed to guarantee 95 percent of the present value of all principal and interest payments but the government and JBIC have yet to agree on how much the guarantee fee would be.

Finance officials said the two parties are close to sealing an agreement on lower guarantee fees after months of negotiations.

However, Teves said nothing is final yet.

“We’re closing the gap but we’re not yet there,” Teves said.

The last time the Philippines tapped the Japanese capital market was in 2001 with the issuance of Shibosai bonds, also a form of Samurai bonds, amounting to ¥50 billion.

The government has been looking at two options to raise funds for its budgetary requirements. One is through the sale of dollar-denominated bonds and the other is through the issuance of Samurai bonds.

Last week, the government successfully raised $1 billion from the sale of dollar-denominated bonds, its third for the year, after issuing $1.5 billion in January and $750 million in July.

National Treasurer Roberto Tan has said the issuance of yen-denominated bonds remains an option for the government.

The proceeds, he said, would be for pre-funding  requirements for 2010.

The country’s budget deficit has already swelled to P237.5 billion from January to September this year, 345 percent higher than the P53.4-billion deficit incurred in the same period last year and just P12.5 billion shy of the full-year ceiling of P250 billion.

In September alone, the deficit hit P27.5 billion or 27.2 percent more than the P21.6-billion deficit incurred in the same month last year.