MANILA, Philippines - The government raised yesterday $1.1 billion from the sale of Samurai bonds to plug its widening budget deficit expected to hit a record P293 billion this year.
With the bond issue, the government has completed its programmed $2.5-billion commercial borrowing requirements for the year, Finance Secretary Margarito Teves said yesterday.
Last month, the government raised $1.5 billion in dollar-denominated bonds.
The government earlier raised its 2010 commercial borrowing requirements to $2.5 billion from $2 billion previously following a revision in its budget deficit ceiling for the year to a whopping P293 billion from the already revised P233.4 billion. Borrowings from multilateral lenders will remain at $1.8 billion as earlier programmed.
The 10-year Samurai notes fetched a coupon rate of 2.32 percent and is 95 percent guaranteed by the Japan Bank for International Cooperation (JBIC).
The government represented by Philippine Ambassador to Japan Domingo Siazon Jr. and JBIC signed the framework agreement for the issue last Feb. 16.
Teves said Japanese investors showed strong interest for the placement following a series of one-on-one investor briefings in Tokyo early February led by National Treasurer Roberto Tan and Finance Undersecretary Rosalia de Leon.
“We are pleased with the positive response of Japanese investors to this bond issue. The proceeds will be helpful in providing for the needs of our people and enabling us to achieve modest economic growth this year,” Teves said.
The transaction, which was structured as private placement format targeting Japanese Qualified Institutional Investors (QIIs), attracted participation from banks, insurance companies, cooperatives and other financial institutions in Japan, the government said.
Total investor interest far exceeded the actual issue size of $1.1 billion, which represents by far the largest bond issue by any non-Japan Asian issuers in the Japanese market ever to date, the government also said but did not provide details.
The issue, which was originally slated for last year, is the government’s first yen-denominated bond sale in nine years.
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 needs to raise funds through local and foreign commercial borrowings to plug its budget gap which already reached P298.5 billion last year, more than four times the P68.1 billion deficit registered in 2008 or an increase of 338.3 percent.