BTr eyes debt swap in mid-2015

The Bureau of the Treasury (BTr) is eyeing a domestic debt swap by midyear while also pushing for the implementation of a program on repurchase agreements (repo) in a bid to increase the volume of liquid securities.

“The debt exchange, we will be doing it, it’s just a matter of time… probably by the middle of the year. We will try to get rid of illiquid ISINs and put more and more into deep-volume securities,” National Treasurer Roberto B. Tan told a forum hosted by the Financial Executives Institute of the Philippines (Finex) late last Wednesday.

ISINs mean International Securities Identification Numbers, which identify specific securities.

Tan later told the Inquirer that the BTr had requested President Aquino to give his go-ahead for the planned peso-denominated debt swap, after which they will seek the approval of the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board.

The BTr will then solicit requests for proposals from the private sector to arrive at the “most attractive” proposal, Tan said.

While the volume and the number of tenors have yet to be determined, the BTr wants a “benchmark-sized” issuance, the National Treasurer said.

Aside from a debt swap, another way to enhance the credibility of the yield curve while increasing the size of existing liquid securities is the proposed introduction of a standardized documentation for a repo program, which will be sponsored by the BTr, Tan told the Finex forum.

“I’m pleased to inform you that we are making good progress in finalizing the implementation of the guidelines in collaboration with the BSP. If all goes well, we will see a domestic repo market… that will provide two-way quotes to securities falling in the benchmark tenors,” Tan said.

The National Treasurer said the repo program might be put in place “as soon as possible, within the year.”

“Hopefully, we can get something done in the middle of the year. There are a lot of consultations that we have to make, including with the BSP, but as an objective that we want to achieve, we are doing our best effort geared up for this. There are very good signs that we will be able to get this off the ground soon given the positive signals; in fact, the desire was expressly conveyed to us by the governor,” Tan said, referring to BSP Governor Amando M. Tetangco Jr.

Tan said he recently met with Tetangco, during which the BSP official expressed that “he would like (the repo initiative) to get off the ground. (Tetangco) is also very much aware of what’s happening, and we have to come up with measures that will address the difficulties encountered by the market right now.”