Thursday, 1 April 2010

Another $1-B bond sale set

Jun Vallecera
Business Mirror

THE Bangko Sentral has approved the proposed $1-billion bond sale targeted at overseas Filipino workers and called the “OFW Bond.”

But it was curious for the national government to label it an “OFW Bond” sale when only a small portion, no more than 20 percent of the total, was actually set aside for migrant workers, official sources said on Wednesday.

Senior officials said the bulk of the sale is expected to come from the various foreign-currency deposit units (FCDUs) of local banks and from institutional buyers cultivated through the years by Finance Secretary Margarito Teves and Bureau of Treasury chief Roberto Tan.

Should the bonds prove attractive for the FCDUs and they buy it all, there should be no new dollars coming into the system and thus no additional pressure for the exchange rate to move up.

Tan previously said a full $1-billion bond sale was too daunting, which was why they planned a sale involving only $500 million that already includes the sale of $100 million in euro-denominated bonds.

Hopefully, the officials said, both Teves and Tan would have reconsidered the “OFW” tag and replace it with something more accurate.

The bonds form part of move to bridge the year’s P293-billion budget deficit, which they partially addressed with a $1.5-billion global bond sale in January, followed by $1.1 billion worth of samurai bonds in February.

Teves said the bond-sale proceeds will help underwrite the P100-billion follow-up fiscal stimulus package needed to ensure the economy will continue to expand this year from actual growth of just 0.9 percent last year in terms of the gross domestic product.

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