Purisima

MANILA – The Philippines eyes to swap up US$ 3 billion worth of bonds before the end of 2010.

Earlier, Finance Secretary Cesar Purisima said they have requested for the approval of central bank’s policy-making Monetary Board (MB) for the planned bond swap.

Purisima declined to give figures on how much they want to swap this year although reports said the Department of Finance (DOF) asked to be allowed to swap US$ 6 billion worth of debt instruments.

Other reports said the MB has approved in principle the bond swap amounting to US$ 3 billion.

National Treasurer Roberto Tan on Tuesday declined to confirm that the national government already got the approval in principle.

“The US$ 3 billion is the maximum,” he said but declined to elaborate on when to do the swap.

Tan said they already have a mandate of which banks would be tapped to arrange the debt swap but declined to identify those in the shortlist.

The present administration wants to lengthen the maturities of its debt instruments as part of its debt consolidation program and to minimize refinancing risks.

Tan said they are still in the process of determining how much would be swapped and which of its debt instruments would be included in the two buckets, one of which would be for a 20-year tenor and the other one a 25-year tenor.

He explained that they have to calculate effect of this activity on additional debt, net value savings, and duration of maturities.

He said this practice not only benefits the government because of lengthening the yield of the debt instrument but is also good for investors.

“(They) would have some kind of threshold that makes it acceptable for the investor… and that’s the heart of the whole thing – trying to get what is the best price,” he added.