$1-b global bond float eyed

PNS — THE government is firming up the sale of $1 billion worth of global peso bonds early this year to raise funds for budget support, and refinance debts maturing next month.

“We’re firming up the timing [of the global debt issue]. We’re looking comfortably at [a float of] $1 billion. It would be the ideal size to create a benchmark even as $500 million would already be enough to create a benchmark for the global bonds,” Tan said.

The proceeds of the global peso bonds would be used for budget support and refinancing, Tan added.

The plan to sell the bonds would also strengthen the peso and boost international reserves, which are expected to reach $61 billion.

“The balance of payments will likely remain in surplus, leading to a further build-up in the international reserves. The peso will then be fundamentally supported by this positive external payments position,” Bangko Sentral Gov. Amando Tetangco said in a briefing at Makati Shangri-La Hotel in Makati City.

“The Philippines is entering 2011 from a position of strength,” he said, noting the economic growth continues to gain traction.

Even as advanced economies continue to struggle, real GDP grew 7.5 percent in the first three quarters of 2010, bolstered by improvements in investments and exports, he said.

At over $60 billion, the foreign exchange reserves could cover close to 11 months’ worth of imports and was equivalent to 11 times the country’s short-term external debt based on original maturity and six times based on residual maturity.

Tetangco, however, stopped short of predicting the future range of the reserves this year and the next. He also did not mention the range of the peso exchange rate this year.

Meanwhile, Tan said some $1.2 billion worth of foreign debt would fall due next month. However, the government has no plans of sourcing all of the refinancing required from the proceeds of the global bond sale alone.

The Bangko Sentral has already given the Treasury the mandate to sell up to $1.5 billion worth of global bonds.

Citigroup and HSBC Holdings will manage the sale of the bonds, according to a person familiar with the plan who declined to be identified.