Business | Economy
Philippines to sell 30% less debt after strong response to earlier issue
Offer to swap $3b of 2021 and 2034 bonds for shorter-dated notes ends
- Bloomberg
- Published: 00:00 September 28, 2010
Manila: The Philippines plans to sell 30 per cent less peso-denominated debt in the coming quarter, having raised 141.6 billion pesos (Dh11.83 billion) from the sale of notes to individuals and a global peso bond offering in the past two months, Treasurer Roberto Tan said on Monday.
The Bureau of the Treasury will auction 75 billion pesos of bills and bonds due in 5, 7, 10 and 25 years in the three months through December, a memo sent by Tan to dealers showed. That compares with the 107.5 billion pesos of debt planned for the current quarter.
The Philippines raised 97.5 billion pesos on August 17 from an issue of retail treasury bonds and earlier this month sold 44.1 billion pesos worth of January 2021 peso notes to overseas investors. The government is borrowing to plug a budget deficit forecast to reach a record 325 billion pesos this year.
"Cash balances have been augmented from proceeds of retail bonds and the global peso issue," Tan said in a mobile-phone message. "Based on cash flow projections, we can reduce the volume of our auctions for the fourth quarter," he said.
The government holds weekly debt auctions, alternating between selling bills due in three months to a year one week and sales of bonds with longer maturities the next. For bills, sale amounts will fall to 7 billion pesos from 8 billion pesos this quarter, while bonds auctions will be trimmed to 8 billion pesos from 8.5 billion pesos.
Government bonds rose on Monday. The yield on the 7 per cent January 2016 peso bonds fell 10 basis points to 5.25 per cent as of 2:14pm in Manila, according to Tradition Financial Services.
The government closed an offer to exchange as much as $3 billion (Dh11 billion) of 2021 and 2034 dollar bonds for existing, shorter-dated notes yesterday in New York.
That may be followed up with a peso bond swap this year. In 2011, the government plans to raise 73 per cent of the funding it needs from the local market, compared to a planned 67 per cent this year.
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