BTr firms up debt exchange plans

MANILA, Philippines - The Bureau of the Treasury (BTr) is now firming up plans for a debt exchange following the successful sale of P188 billion worth of retail treasury bonds (RTBs), a ranking Treasury official said.

Deputy Treasurer Eduardo Mendiola said the next transaction would be the domestic debt exchange, which is part of the government’s debt liability management strategy.

“Most likely it will be in the first and second week of December,” Mendiola said Wednesday night.

He said the Treasury has tapped the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (Landbank), the country’s two largest government financial institutions to handle the debt exchange.

The two GFIs will be tapping private banks to help in managing the transaction, Mendiola said.

He said the debt exchange was originally planned for November but banks sought more time to prepare for the deal.

Under the plan, the government will exchange outstanding shorter-dated debt in the market with longer-dated papers.

Mendiola said the government is looking at issuing a minimum of P60 billion of each of the following tenors: 7, 10, 15, 20 and 25-year T-bonds and exchange these with outstanding debt in the market.

The government currently has roughly P2.9 trillion in outstanding domestic debt, some of which are illiquid bonds or those that trade a lot less frequently than other bonds.

The debt exchange comes on the heels of a successful RTB sale of P188 billion concluded this month. This was the first time the government sold 25-year RTBs.