MANILA Nov 8 The Philippines launched a 10-year
global peso notes issue on Thursday to raise funds up to $1
billion to buy back expensive foreign debt as part of a debt
liability management programme.
The pricing is expected later on Thursday, but Manila has
set an indicative price guidance o f 4.1 percent with the U.S.
dollar/ peso rate set at 41.068, IFR, a unit of Thomson Reuters,
The peso is Asia's best performing currency so far this
year, having appreciated nearly 7 percent against the dollar on
strong foreign inflows into Philippine stocks and bonds. Further
gains are forecast, according to a Reuters poll.
The Southeast Asian economy is seeking to cut its dependence
on foreign borrowing by pursuing debt buybacks and swaps, and
innovative deals such as local-denominated global bonds, a move
that has been praised by credit rating agencies.
Rosalia de Leon, head of the International Finance Group,
said the government is looking to buy back a maximum $1.5
billion worth of high coupon U.S. dollar and euro-denominated
debt, and will buy US dollars from the central bank to complete
the target repayment amount.
The central bank has been encouraging the government tap
into its record high reserves of more than $80 billion to help
temper the peso's rise.
HSBC, Credit Suisse and Deutsche Bank
, Citigroup, JP Morgan, Standard
Chartered Bank, Morgan Stanley, UBS,
Goldman Sachs have been hired to manage the deal.
Moody's has assigned a provisional rating of Ba1 to the
government's global peso notes offer.
The forthcoming global peso notes offer comes more than a
week after Moody's upgraded the country's ratings to one notch
below investment grade, matching that of rivals Standard &
Poor's and Fitch ratings.
The Philippines has sold nearly 98 billion pesos ($2.38) in
global peso bonds since September 2010, and remains the only
Asian sovereign to offer debt in a synthetic format, issuing in
local currency but settling in U.S. dollars.
It also plans to raise as much as $500 million from the sale
of U.S. dollar bonds to local investors to help repay part of
the foreign debt of state-run Power Sector Assets and
Through its debt management schemes, the Philippines has
narrowed its public debt as a percentage of GDP to 42 percent
from 68 percent in 2003. Its interest payments now account for
around a fifth of state spending from close to a third in 2005.