Thursday, 25 February 2010

Road show set for P30-B bond offer to OFWs

Erik de la Cruz
Business Mirror

PREPARATIONS are under way for the Philippine government’s landmark debt sale to overseas Filipinos, with the Bureau of Treasury (BTr) tapping the services of four financial institutions—First Metro Investment Corp. (FMIC), BPI Capital Corp., Philippine National Bank and state-run Land Bank of the Philippines—to drum up interest in the P30-billion offer.

The BTr and the four issue managers had initially agreed to hold a global road show for the deal in the third or fourth week of March, according to LandBank executive vice president Cecilia Borromeo.

The government will offer three-year and five-year bonds denominated in US dollar and euro as investment options to Filipinos abroad, also called OFWs, possibly in early April, Borromeo told reporters on Tuesday night.

The government is seeking to raise $500 million and €100 million from the sale of retail bonds, equivalent to about P30 billion at current exchange rates.

It sold $1.5 billion in dollar bonds to international investors in January and $1.1 billion of yen-denominated bonds this month to finance its budget deficit, which is expected to widen to P293 billion this year.

Borromeo said the initial plan was to hold simultaneous road shows in the US, Europe, Asia and the Middle East.

“Initially we identified New York, Los Angeles and San Francisco [for the US road show],” she said. “For the European leg, the initial destinations are London, Milan and Rome.”

The government and issue managers are also planning to reach out to OFWs in Hong Kong and Singapore, and those in the Middle East, particularly in Dubai and Riyadh.

In their latest joint monthly report on the fixed-income market, analysts at FMIC and economists at University of Asia and the Pacific (UA&P) said the government may sell up to $770 million, or more than P35 billion, in RTBs.

They said a total of P192 billion of foreign currency-denominated bonds may be sold by the government this year, which will cover about two-thirds of the programmed budget deficit.

With OFW remittances growing robustly, reaching more than $17 billion in 2009, the deposits held by banks’ foreign currency deposit units, or FCDUs, have soared to record levels of more than $25 billion, most of which are placements by Filipinos.

The target buyers of retail bonds are clearly awash with liquidity, the FMIC-UA&P report said.

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