MANILA, Philippines--The Bangko Sentral ng Pilipinas (BSP) has warned that the plan of the Bureau of the Treasury to issue bonds specifically for overseas Filipino workers could lead to a further appreciation of the peso and, in the process, hurt exporters.

Diwa Guinigundo, deputy governor at the Bangko Sentral ng Pilipinas, said the government had already breached its foreign commercial borrowing program for 2010.

The government was to borrow only $2.5 billion worth of commercial loans from foreign creditors this year, but it has sold $1.5 billion in global bonds in January and $1.1 billion worth of Samurai bonds in February.

The Treasury is again planning to sell bonds specifically meant for OFWs in April.

While the additional borrowing was not inflationary, Guinigundo said the OFW bonds were expected to put additional upward pressure on the peso.

?The drawback of an additional foreign borrowing is its contribution to the appreciation of the peso,? he said, noting that some sectors of the economy were being adversely affected by the rise of the local currency.

The central bank executive said there would be some benefits if the government would instead borrow more from the local market by tapping peso-denominated credit.

?The peso is appreciating. One way to moderate the appreciation of the peso is to change the financing mix [of the government] to favor additional domestic borrowings,? Guinigundo said.

Under the government?s original borrowing program for 2010, it should observe a borrowing mix of 72:28 in favor of domestic borrowings. This means 72 centavos of every peso to be borrowed by the government should come from local sources.

However, this borrowing mix will no longer be observed should the government push through with the sale of the foreign currency-denominated OFW bonds. The government is planning to sell $500 million in dollar-denominated and $100 million in euro-denominated OFW bonds.

A successful sale of $600 million in OFW bonds will change the borrowing mix to 65:35 in favor of peso-denominated financing.

The government has tapped Land Bank of the Philippines, First Metro Investment Corp., BPI Capital, and PNB Capital Investment Corp. as issue managers for the OFW bond issue.