Palace OKs bond issue worth up to $2B

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 yesterday.

“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 in- fused 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.