Philippines May Sell Another $1.5 Billion of Overseas Bonds By Year-End
The Philippines may sell as much as $1.5 billion of overseas bonds in the remainder of the year to fund its budget deficit, following issuance of $2.67 billion in the first quarter, Treasurer Roberto Tan said today.
The issuance would comprise the first global sale of peso- denominated bonds and dollar notes that are to be offered as part of a debt exchange, Tan said. The government aims to trim overseas sales to about $2.5 billion next year, he said.
“We will source additional funds from the global peso issuance and raise possible new money from the debt exchange,” Tan, a 56-year-old career bureaucrat who was finance undersecretary before assuming his present role, said in a phone interview from Manila.
President Benigno Aquino’s administration aim to bolster the nation’s finances, in part by tapping new sources of funds and stretching the average maturity of its debt. The budget has been in deficit for 21 of the last 25 years and the shortfall is projected to widen to 325 billion pesos ($7.2 billion) in 2010, from 298.5 billion pesos last year.
The timing of the peso bond sale will depend on “market conditions,” presidential spokesman Ricky Carandang said today.
2011 Targets
The government plans to borrow a combined 773 billion pesos from domestic and overseas markets next year, 2.4 percent higher than this year’s projected 754.6 billion pesos, Tan said. Of the total, about 73 percent, or 563.3 billion pesos, will come from the domestic market, he said.
Overseas borrowings, which include loans from multilateral institutions, will decline to 209.6 billion pesos from an estimated 259.1 billion pesos in 2010, he said.
Next year’s total borrowing will be higher as the amount of debt falling due increases, offsetting the effect of a budget deficit expected to narrow to 290 billion pesos, Tan had said on Aug. 12.
The nation sold $1.5 billion of dollar bonds and 100 billion yen ($1.17 billion) of notes in the first quarter. It is closing a sale of retail treasury bonds today at about 100 billion pesos, Tan said.
The government has central bank approval to seek arrangers from its planned global peso debt and the issuance of dollar bonds in exchange for older, shorter-dated notes, Governor Amando Tetangco said last week.
To contact the reporter on this story: Clarissa Batino in Manila at cbatino@bloomberg.net.
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