P-Noy expects bonds to sell well

MANILA, Philippines –  President Aquino expects the peso-denominated global funds to sell well as he expressed elation yesterday over reports that the Philippines and Indonesia were “the hottest destinations” for investments at this time.

Aquino said the renewed confidence in the country’s economy was being relayed to him by investors themselves.

Finance Secretary Cesar Purisima said the administration has tapped the services of some banks to help sell up to $1.5 billion in peso-denominated bonds in the global debt market this year.

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

“So will I say it will be 13 times oversubscribed, I don’t know. There are other factors. For instance, the issue on (Korean conflict) is not yet fully resolved. There are still a bit of tensions. But we think...the response will be in the same vein as what happened in the first global offering,” Aquino told reporters in an ambush interview after the change of command ceremony at the Philippine Navy in Manila.

The President said an investment fund from an Scandinavian country told him informally that “Indonesia and the Philippines are the hottest destinations for all of these investments,” particularly call centers and business process outsourcing.

Aquino said Convergys, a leading call center and BPO company, “corrected” him by saying it did not only expand operations in Manila but opened another one in Alabang, Muntinlupa.

The President also said the administration was trying to manage the debt by converting foreign currency denominated debts to peso denominated to reduce foreign currency risk.

“We are taking advantage, where it’s available, of prevailing market conditions to reduce the debt burden,” Aquino said.

National Treasurer Roberto Tan said the issuance could happen within January as the government had 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.

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 was also looking at doing a debt swap of existing dollar debt with local currency bonds.