BSP approves bond swap to manage local debt

The Bangko Sentral ng Pilipinas has approved the Bureau of Treasury plan for a peso bond swap as part of efforts to manage the country’s P4.6 trillion domestic debts. However, the approval will involve P60 billion in outstanding debts, National Treasurer Roberto Tan told reporters Monday. The central bank took the position that the peso bond swap may now start anytime, Tan said without giving out details of the exercise. “The Monetary Board gave its opinion we can now safely engage in a bond swap, although we still have to secure a separate view from the Office of the President for its own approval," Tan explained. Finance Secretary Cesar V. Purisima told reporters in New York last September that the Philippine government was thinking of a bond swap amounting to P8 billion. But for the swap to have the desired impact on the country’s debt, the amount has to be around $1 billion, he said. The process involved swapping short-term outstanding debts with 10- or 20 year bonds. The swap would also entail less debt service payments as peso interest rates are at records lows, with short-term Treasury bill rats now averaging 1.8 percent and 10-year debts around 7.6 percent. Also in September, the government swapped foreign currency denominated bonds with less expensive and longer maturing debts. — VS, GMANews.TV