Palace OKs bond issue worth up to $2B

NATIONAL TREASURER ROBERTO TAN. INQUIRER PHOTO / GRIG C. MONTEGRANDE

President Aquino has given the go-ahead for the Philippines to borrow up to  $2 billion in the form of an offshore bond issue, although the government was  still seeking approval from the US Securities and Exchange Commission to push through with the transaction early this year, National  Treasurer Roberto B. Tan said Monday.

“On the special authority for offshore liability transaction, yes we  have the approval of the President,” Tan told the Inquirer.

“But we still have to secure the shelf registration from the US SEC,  which will take several weeks before we can launch,” Tan said, adding  that the government was already working to get the nod of the US regulator.

Shelf registration will allow the sale of securities via a single  prospectus for future, multiple offerings.

As early as November last year, the Bangko Sentral ng Pilipinas’  Monetary Board approved the planned sovereign bond issue, as the  Bureau of the Treasury was then eyeing to borrow overseas earlier than  usual.

However, the plan for an offshore bond offer before 2015 ended was  eventually scrapped, as undertaking shelf filing with the US SEC would  take time.

In the past few years, the Philippines had traditionally tapped the offshore bond market  early in the year.

For instance, the government sold $2 billion in 25-year bonds in January  last year at a record-low coupon of 3.95 percent.

The bigger chunk of $1.5 billion was swapped to retire old debt paper  previously issued at higher rates and maturing between next year and  2034, while $500 million was infused into the budget.

The national government plans to borrow less this year and slash the  debt stock to a record low equivalent to 41.8 percent of the economy from the estimated 44.7 percent last year.

“Because of our fiscal consolidation efforts, we will need to borrow  only P674.8 billion to finance the projected P308.7-billion deficit, to  amortize P347.7 billion of our maturing outstanding debt, while  maintaining sufficient available cash,” President Aquino said in his  budget message for fiscal year 2016.

Domestic borrowing will comprise the bulk or 84.5 percent of the total.  The government will source P570.2 billion from the auction of treasury  bills and bonds.

The Treasury announced last week that it will auction off a total of  P135 billion in
T-bills and T-bonds during the first quarter.

The government will also borrow P104.6 billion from foreign  sources—P54.1 billion in program loans, P17.1 billion in project loans,  and P33.4 billion in bonds and other inflows.