RP concludes Japan road show

MANILA, Philippines - The Philippine government led by National Treasurer Roberto Tan successfully concluded last week its road show in Japan for the proposed Samurai bonds, market sources said over the weekend.

The government team met with mostly Japanese investors including mutual fund managers, pension funds and insurance companies.

Following the successful roadshow, sources said the Philippines is looking at selling roughly $500 million in Samurai bonds with a tenor of five years but it remains open to issuing up to $1 billion worth of the paper.

If on the other hand, the government is unable to raise $1 billion from the sale of Samurai bonds, it can also sell euro-denominated or dollar-denominated bonds or issue bonds for overseas Filipino workers (OFWs) to fill the gap.

The government, sources said, prefers to issue OFW bonds to provide investment opportunities to Filipinos abroad.

Tan said in an earlier interview that the actual issuance may take place in the third week of February or the latest, in the first week of March.

In June last year, the Philippines and JBIC signed a memorandum of understanding (MOU) for the planned Samurai bonds issue.

Under the MOU, JBIC would guarantee 95 percent of the present value of all principal and interest payments.

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.

Early last month, the government sold $1.5 billion in dollar-denominated bonds, making it the first Asian sovereign debt issuer for 2010.

Following the sale of $1.5 billion in dollar-denominated bonds, the government still needs to raise $1 billion to complete its commercial borrowing requirements for the year.

Fiscal authorities earlier revised the borrowing program for 2010 and are now looking at raising $2.5 billion from foreign commercial creditors from a previous program of $2 billion but maintained the plan to borrow $1.8 billion from multilateral lenders.

The government is raising funds to plug its budget deficit which already hit P272.5 billion as of end-November 2009.

Fiscal authorities expect the full-year deficit to hit P290 billion this year, above the ceiling for the year of P250 billion and below the previous estimate of P300 billion for 2009.

This year, the budget gap is expected to hit P293 billion, above the initial estimate of P233.4 billion.