Government mulls new Samurai bonds

MANILA, Philippines - The government may again issue Samurai bonds in the first half of the year on the back of strong interest from Japanese investors during the economic team’s recent visit to Japan, Finance Secretary Cesar Purisima said yesterday.

“We are seriously considering it,” Purisima said.

He noted that the during the economic team’s road show in Japan, many investors have been asking when the government would again issue yen-denominated debt.

“It will be sometime during the first half if we decide to push through,” the Finance chief said.

If the government decides to push through, the tenor of the bonds may be as long as 25 years, significantly longer than the 10-year bonds issued by the Arroyo administration last year.

Last year, the government of then President Arroyo raised 100 billion yen or $1.1 billion from the sale of Samurai bonds to plug its widening budget deficit.

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).

Total investor interest far exceeded the actual issue size of ¥100 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.

Last year’s Samurai bond issue was the government’s first yen-denominated bond sale in nine years.

Prior to this, the Philippines tapped the Japanese Capital Market in 2001 with the issuance of Shibosaibonds, also a form of Samurai bonds, amounting to ¥50 billion.

Government officials were in Tokyo last week for the 29th Joint Committee Meeting of the Philippine Japan Economic Cooperation Committee Inc. (PhilJec).

Aside from Purisima, the officials present during the meeting included Trade Secretary Gregory Domingo, Energy Secretary Rene Almendras and Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo. They met with very senior members and decision makers of the Japanese investment and business communities and encouraged them to take part in the positive growth momentum of the Philippines.

Purisima said the Philippines achieved a 7.3 percent GDP growth in 2010 which is the highest growth rate since 1976. 

“The Philippines has posted 48 consecutive quarters of positive growth and the nation is now in a transition phase to boost this growth trajectory to an investment led growth from one that is fueled by consumption,” he said.

During the meetings, Purisima also said that the Aquino Administration is firmly committed to fiscal consolidation.

He reported that in 2010, the fiscal deficit was well within the P325 billion- deficit target on account of improved revenue collections and disciplined spending.

PhilJec, formerly known as the Philippine National Committee for Economic Cooperation with Japan, was established in 1974 to promote, strengthen and expand trade, economic, scientific technological advancements, exchange assistance to business endeavors in both the Philippines and Japan. It was designed to be a forum for private sector dialogue and exchange of ideas geared towards the enhancement of Philippines-Japan relations. The JPECC, on the other hand, is PhilJec’s counterpart organization in Japan.