P300-B domestic debt swap OKd

The planned peso-denominated debt swap has secured the approval of President Aquino as well as the policymaking Monetary Board of the Bangko Sentral ng Pilipinas, Finance Secretary Cesar V. Purisima said on Monday.

Separately, National Treasurer Roberto B. Tan told reporters after a treasury bills auction held also Monday that the peso bond exchange in the pipeline would be worth up to P300 billion with long tenors.

“Tan is on top of [the domestic debt swap] and he’s just looking for the right market opportunity. He got approval already of the President, so it’s just a question of timing,” Purisima told reporters at the sidelines of the Bureau of Internal Revenue’s 111th anniversary celebration.

“We’re now in deliberation mode. We’re talking with the different GSEDs [government securities eligible dealers] who are at the top tier of our participants. We have an approval of about P300 billion, but that doesn’t mean we’re going to do that. [The size of debt swap] depends on the pricing and tenors,” Tan said.

Tan said the Treasury wanted to undertake domestic liability management “while we have the time” ahead of any US Federal Reserve move to adjust interest rates, which is seen happening this September.

“As we approach [the expected US Fed rate adjustment] closer and closer, it’s expected that market jitters will increase even if the Fed is doing this in a gradual way, sending the appropriate signals to the market. Whatever happens, as you approach that date, some players will probably have different views,” he explained.

The next step for the Treasury is to solicit requests for proposals from the private sector and then choose the “most attractive” proposal.