Treasury’s bond swap draws over P140-B bids

THE GOVERNMENT has received more than P140 billion in bids for 2024 debt papers on offer in a domestic bond swap, the Bureau of the Treasury confirmed Friday.

Referring to a Reuters report that put the volume of offers at more than P140 billion, National Treasurer Rosalia V. de Leon said in a text message to BusinessWorld: "More, but we cannot disclose [the volume of offers] since we need to clean up."

Ms. de Leon also confirmed that, separately, more than P20 billion has been tendered for the sale of new 2024 bonds -- proceeds from which will finance the accrued interest on the bonds submitted for swapping.

"We have a strong order book," Ms. de Leon said in her text message, without elaborating. She said an indicative coupon rate for the bonds could not yet be disclosed.

The country began a bond swap offer last Aug. 6, as part of a "domestic liability management transaction" that would see the country aiming to issue at least P60 billion in new benchmark bonds.

The new benchmark bonds, with a tenor of 10 years, are due Aug. 20, 2024 and carry a minimum coupon of 4%.

The offer ran until Friday, and is open to both eligible bondholders looking to exchange their debt papers and to new investors eyeing a subscription to the new benchmark bonds.

The government, if it accepts any offers, will announce the coupon rate for the new benchmark bonds on Tuesday, August 19, while settlement will be on Wednesday, August 20.

Up to P2.017 trillion in existing bonds are deemed eligible for the exchange, according to an official list on the Treasury website.

The transaction "forms part of the government’s program to manage its liabilities," the Treasury said in a statement as the exercise commenced.

In particular, it is meant to "rebalance its domestic debt portfolio, foster efficient pricing of government securities (GS) and enhance market trades for the government’s domestic-issued instruments."

The proceeds from the sale of new subscriptions "will be primarily used to settle accrued interests payable to bondholders of accepted eligible bonds in the exchange component and other transaction related expenses," the statement said.

The Philippines’ last debt swap took place in July 2011, with the government issuing a total of P323.4 billion worth of fresh 10.5- and 20-year bonds.

That bond swap extended the average maturity of accepted bonds to 18.01 years from 5.48 years. -- Raymund Luther B. Aquino

source:  Businessworld

Continue to site