Monday, 19 October 2009

Philippines raises $1B in global bond market

Jun Vallecera
Business Mirror

FOR the third time this year, the government tapped the global bond market for $1 billion to help it rein in the year’s budget deficit feared to hit P300 billion.

It will cost Filipino taxpayers 6.375 percent a year to pay interest on the IOUs the next 25 years, or until October 2034.

“The newly issued bonds were priced at 99.382 percent to yield 6.425 percent, or an equivalent of 216.5 basis points over benchmark US Treasuries,” Finance Secretary Margarito Teves said in a statement.

Teves needs the money to build or rehabilitate ruined public infrastructure left by typhoons Ondoy and Pepeng, the combined impact of which could widen the budget deficit to more or less P300 billion instead of P250 billion as programmed.

“We are very pleased to have been able to extend the republic’s maturity profile while, at the same time, achieving the lowest yield for a new 25-year benchmark US dollar global offering by the Philippines,” Teves said soon after the deal was completed on Friday.

The bulk, or 37 percent, of creditors were US-based investors and 25 percent were Filipinos and others in the region. The rest were European investors comprising the balance of 13 percent.

“Positive investor reception for this transaction allowed us to resume our long-term borrowing strategy to achieve our funding objective in support of our fiscal program,” Treasury chief Roberto Tan said in reaction.

The transaction was arranged by Deutsche Bank Securities Inc., the British banking giant HSBC and the Swiss-owned UBS AG as joint lead managers and book builders.

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