Gov't plans 10-year bond issue worth P20B for central bank
Reuters
First Posted 08:18:00 08/20/2008
Filed Under: Central Banks, Emerging Markets Debt, Government, bonds and t-bills
MANILA, Philippines -- The government plans to issue 10-year bonds worth at least P20 billion ($440 million) around September to partly fund the P40-billion recapitalization of the central bank, National Treasurer Roberto Tan said Tuesday.
The remaining P20 billion capital requirement of the central bank would be covered next year, Tan said.
The bond issue is meant to fast track the total P50-billion recapitalization of the central bank, which last year posted its first net loss since its formation in 1993.
The central bank's net loss of P86.9 billion in 2007 was mainly due to its heavy intervention in the currency market to slow the peso's rise and the high cost of keeping a short-term deposit facility aimed at dampening domestic liquidity.
The central bank's net loss narrowed to P18.25 billion in the first five months of the year from P18.4 billion in January to April, latest official data showed.
The peso, Asia's best performing currency last year with gains of about 19 percent, is down 9.27 percent so far this year, one of the region's worst laggards.
Only P10 billion from the total P50-billion recapitalization program was given by the government to the central bank in July 1993 when it became an independent body, replacing the old monetary authority which did not enjoy full autonomy from the central government.
Tan said the bonds would have as underlying assets the government's annual P4-billion allocation for the central bank's recapitalization under its spending budget for the next 10 years.
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