News Flash Gov’t plans debt swaps, bond exchange for ’13
Gov’t plans debt swaps, bond exchange for ’13
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- Published on Thursday, 02 August 2012 00:00
By A Web design Company
As part of its liability management program, the government will conduct debt swaps in 2013 on top of its planned local bond exchange by the end of this year, Finance Secretary Cesar Purisima said.
Purisima said at the sidelines of the 2013 budget hearing of the House committee of appropriations that the government will push through with its planned debt exchanges next year, “if the market opportunity is there.”
“We will continue with the debt exchanges to pursue our objectives,” said Purisima. The government wants to reduce borrowing costs, lengthen maturities and reduce the bunching up of maturities and lessen the foreign currency component in government debt.
“Our continued efforts to take advantage of market opportunities to lengthen the maturity profile of both domestic and external debt enabled us to channel available resources to invest in our people and create more jobs,” Purisima said.
Purisima said that in 2013, the national government’s gross borrowings will amount to P757.8 billion, of which 25 percent or P189.8 billion will be sourced from foreign creditors, while the remaining P568 billion or 75 percent will come from domestic sources.
Purisima said eventually, government hopes to shift the borrowing mix to 80-20 in favor of domestic borrowings.
“The increased domestic funding is in line with our strategy to reduce foreign exchange rates, lengthen maturities and lower interest costs to generate fiscal space,” he said.
Meanwhile, Purisima said the ratio of the national government debt to the country’s gross domestic product (GDP) will decline to 49.5 percent in 2013, from this year’s program of 50.3 percent of GDP.
Actual national government debt will increase to P5.779 trillion next year from the P5.348 trillion program this year.
“The drop in the country’s debt ratio is one of the positive indicators for the country to earn a credit rating upgrade,” Purisima said.
An official of the Bureau of Treasury earlier said the government will offer retail treasury bonds and will conduct a local bond exchange in the fourth quarter of this year.
Deputy Treasurer Eduardo Mendiola said government will push through with a 25-year RTB sale this October.
“I would be happy with a P60 billion or P70 billion (initial) issue,” Mendiola said.
He added that the government is planning to issue 7, 10, 15, 20, and 25-year bonds in its planned debt swap.
“The plan is to issue bonds in these tenors, in exchange for shorter-dated outstanding bonds,” he said.
