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The government has decided to go for the benchmark $500 million in its first ever offering of peso-denominated bonds in the global capital market.

Finance Secretary Cesar Purisima yesterday said government is now finalizing plans to sell the bonds withtin the year.

"The offer (would be) at least half a billion dollars (because) lower than that would not meet distribution requirements," Purisima said. "Timing depends on the market but it would be within the second half."

Purisima said the government has decided to borrow overseas to lessen pressure on local bond issuances.

"We don’t want to crowd out private investments in the future so that whatever liquidity they have will go to investments in infrastructure like improving the food supply chain," he said during Wednesday’s formal signing with the banks handling the local issue of new retail treasury bonds (RTBs).

He said the preferred tenor would be between five to 10 years.

Banks have proposed a five-year maturity.

Purisima also said there would be a "tax-efficient" treatment of global bond offer, but it would not be tax-free.

"We will design the structure in such a way that it would be marketable," he said.

The finance chief nevertheless assured that they will see to it that investors will have "little problem as possible."

He said the planned global bond issue in peso currency would follow the template of other countries which earlier sold peso bonds like Chile, Colombia and Mexico.

Purisima said the high credibility and the strong mandate received by the Aquino government should be a come-on for overseas investors.

He added that the planned bond swap would also be launched within the year.

A roadshow in key markets abroad would soon follow after the government concludes the RTBs float this month.

National Treasurer Roberto Tan earlier indicated good prospects for the peso global bond float, noting the successful peso bond sale of Chile last week. Tan said Chile sold at least $1 billion worth of peso global bonds last Friday.

"So it means that the prospect is very good," he said.

The Arroyo government has been a constant visitor to the global bond market, with a $1.5 billion float last January and followed by a $1.1 billion yen-denominated issue in February.

In April, the government sold $500-million in multi-currency OFW bonds to overseas workers who are based in Europe, Southeast Asia and US and also to their families in the country.

The global bond float in peso currency would be a first for the country

The Asian Development Bank (ADB) issued global bonds in peso currency in 2007 worth P5 billion.

The Aquino economic team has said that it would be launching programs to efficiently manage the country’s debt like extending maturities through swaps and exploring hedging facilities.

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