Purisima: Dollar-peso loan swap deal approved

The Monetary Board (MB) has approved the Aquino administration’s plan for a dollar-to-peso debt swap, Finance Secretary Cesar Purisima said Monday. The Department of Finance is now waiting the go ahead from Malacañang, Purisima said during the budget hearing at the House of Representatives. Government is now preparing for the swap transaction’s implementing guidelines, with the timing still to be threshed out, said a Finance official who asked not to be name for a lack of authority to speak on the matter. “The Monetary Board has approved it. The request now is with the Executive Secretary," Purisima said. “The execution will depend on market conditions," he added. The peso-denominated dollar bonds to be issued in the transaction may have a 15-year tenor to fill in the yield-curve gap, National Treasurer Roberto Tan earlier said. The 15-year maturity is vacant in the yield curve of Philippine global peso notes, Tan added. Government now has shortlist of banks to handle the debt-swap deal which include Standard Chartered Bank, Citigroup, JP Morgan, HSBC, Goldman Sachs, and UBS. Redenominating foreign debt In the debt-swap transaction, the Philippine government will issue peso-denominated dollar bonds and exchange the notes with outstanding dollar bonds, a move that is part of efforts to redenominated Philippine foreign debt. It is also among the options studied by government to redenominate its foreign exchange liabilities into pesos to cushion the economy from foreign exchange fluctuations. The Aquino administration last month completed its second domestic bond exchange. Investors offered to swap P323.5 billion worth of bonds for debts maturing in 2022 and 2031. With P292.5 billion in accepted tenders, it was the largest domestic bond swap transaction exceeding the five previous offerings. The Philippine government issued P67.6 billion of 10-year benchmark bonds maturing in 2022 and P255.8 billion of 20-year bonds due 2031. The swap extended the average maturity of the portfolio of Philippine eligible bonds by 37.9 percent or approximately 2.08 years with the extension of average maturity of accepted bonds from 5.48 years to 18.01 years. — VS, GMA News