PHL offers to buy back $1.5-B sovereign debt

The Philippine government Monday told its creditors it intends to buy back $1.5 billion in outstanding and euro- and dollar-denominated bonds, Finance Undersecretary Rosalia de Leon said in an interview with reporters. "We issued a tender offer today to buy back outstanding ROPs (Republic of the Philippines bonds)," De Leon said. The invitation is for investors “to sell global bonds for cash in a modified Dutch auction," the Department of Finance said in a separate statement Monday. A Dutch auction is a public offer structured in way that takes the highest price as a starting point and lowered until an acceptable price is reached. “The Republic’s target is to spend $1.5-billion equivalent to purchase bonds and settled accrued interest but may spend more or less than this amount at its sole discretion," the department said. De Leon said the Philippines has $17.5 billion worth of eligible sovereign debts for the buyback. “The clearing price for each series will be determined by the Republic pursuant to a modified Dutch auction," the department said. The government is in a strong liquidity position and conditions are ripe for such an exercise, the department also said, citing Finance Secretary Cesar Purisima. "Market conditions present an opportunity to proactively manage its external indebtedness in a cost effective manner. This is consistent with our objective to increase the local currency component of our indebtedness while extending maturities and reducing cost," Purisima said. For the transaction, the Philippine government hired Citigroup and J.P. Morgan as joint global coordinators and Citigroup, Goldman Sachs (Asia) L.L.C., HSBC, J.P. Morgan, Standard Chartered Bank and UBS as dealer managers. — VS, GMA News