Billions of pesos in debt swap this July

Finance Secretary Cesar Purisima said on Friday the government can go ahead with its planned debt swap on July 5 after the proposal was approved by the Office of the President, the Bangko Sentral ng Pilipinas, and the Securities and Exchange Commission. The government intends to issue 10- and 20-year bonds in exchange for shorter-dated bonds in the market, with a minimum issue size of P40 billion for each tenor. But no new money may be involved. Treasury officials said the offer might match what the government had offered last December when P199 billion were successfully swapped with new 2020 and 2035 bonds. The offer period is expected to close by mid-July. The Land Bank of the Philippines and the Development Bank of the Philippines had earlier been appointed to handle the debt swap. But four private backs were also hired as joint issue arrangers, namely the First Metro Investment Corp., BPI Capital Corp., SB Capital Investment Corp., and Citibank. The government is looking to finance a budget deficit projected to hit roughly P290 billion this year or 3.2 percent of total economic output. In September 2010, the government had issued $2.99 billion in a dollar debt swap made up of $2.04 billion of 2021 US dollar bonds and $950 million of reopened 2034 US dollar bonds. It also sold $200 million of new bonds due 2021. — MRT/VS, GMA News