Government taps banks to help sell $1.5-B global peso bonds

MANILA, Philippines - The Aquino administration has hired banks to help sell up to $1.5 billion in peso-denominated global bonds in the global debt market this year, Finance Secretary Cesar Purisima said yesterday.

These banks are Citibank, HSBC, JP Morgan, Credit Suisse, Deutsche Bank and UBS, said a government source who declined to be identified because of the sensitivity of the matter.

“The government has hired banks to help sell global peso bonds due in as long as 25 years,” he told reporters.

The finance chief is optimistic that the bonds would be well received by investors, saying the demand for Philippine debt papers remains strong.

“Demand for emerging-market investments will continue to be strong. We will continue to reduce foreign-currency debt and continue to lengthen maturity. Any transaction that will bring us closer to that goal, we will do,” Purisima said.

Asked when the actual issuance would be, Purisima declined to give a definite timetable, simply saying that the government would be “opportunistic” in its borrowing.

In a separate interview, National Treasurer Roberto Tan said the issuance could happen within January as the government has done the past years.

Tan said the government might borrow up to $1.5 billion in peso-denominated global bonds as earlier approved by the Bangko Sentral ng Pilipinas (BSP).

“It depends on market demand,” he said.

The planned peso-denominated global bonds will have maturities of 15 to 25 years, government sources said.

Last year, the BSP’s monetary board gave its in-principle approval to the government to issue up to $1.5 billion in peso-denominated global bonds.

The issuance of peso-denominated bonds is the preferred route of the government in raising funds as this would cushion the country from the impact of foreign exchange fluctuations.

The issuance of the usual dollar-denominated bonds is not among the government’s immediate fund-raising plans.

Last September, the government raised $1 billion from the issuance of the first-ever global peso bonds.

Aside from issuing peso-denominated global bonds, Tan said the government is also looking at doing a debt swap of existing dollar debt with local currency bonds.

Last week, the administration issued a total of P200 billion worth of 2035 and 2020 bonds in a domestic debt swap and sale.

Since stepping into office, the Aquino administration has been putting in place measures that would lengthen the government’s debt maturity profile.