Treasury launches local bond swap

The Bureau of the Treasury has launched its 300-billion denominated debt exchange issue to lengthen the government's debt maturity profile and generate savings.

National Treasurer Roberto B. Tan said the transaction forms part of the government’s liability management program to establish liquid benchmarks to promote liquidity and generate savings for the government.

The treasury has already secured approvals from the Bangko Sentral ng Pilipinas and Malacanang for a 300billion local bond swap for a minimum issue of 50 billion for each of the new benchmark bonds, Tan said.

“The transaction invites bondholders of certain eligible government securities to exchange their bonds for new benchmark bonds due 2025 and 2040,” Tan said.

The 10-year and 25-year bonds have minimum coupon rates of 3.635 percent and 4.625 percent, respectively.

The offer period for the government's bond swap program will end on September 4. The coupon rate for the new bonds will be announced on September 7, and settlement is on September 9.

Tan said the exercise simultaneously offers subscription to the new benchmark bonds due 2025. “This has been clamored by investors based on feedback we've been getting from our partner financial institutions so I think it's right to doing it at this time,” Tan told reporters.

“The domestic bond market has not been materially affected by the equities, and foreign exchange disturbances that have been happening during the past two weeks, so based on our consultation with our underwriters and leads, they were very positive that this will be successful,” he added.

In August last year, the government issued 140 billion of 10-year bonds, its first debt exchange