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RP okays plan to raise $2B thru bonds sale

The government has approved a plan to raise up to $2 billion from the overseas debt market to fund this year’s record budget and pay off liabilities, a senior official said yesterday.
The government is “discussing with banking partners” the best time to sell the bonds, national treasurer Roberto Tan said.
The Philippines, one of Asia’s most active issuers of US dollar-denominated bonds, has a history of issuing sovereign bonds early in the year to get favorable borrowing terms and raise the bulk of its foreign debt needs before the markets get more volatile.
Of the $2 billion, Tan said $500 million would be used to finance this year’s P3.35 trillion  ($67.7 billion) national budget and the rest would be used to settle obligations.
The 2017 budget is 11.6 percent higher than last year’s spending plan. It allows the government to spend more on roads, bridges, airports and meet a 6.5 to 7.5 percent economic growth target the president has set for the year.
To help fund the spending program, the government plans to raise a total P126.26 billion by selling global bonds and from official development assistance loans. It also plans to raise 505.03 billion pesos via treasury bills and bonds.
The government’s initial three-year Treasury bond (T-bond) offering for 2017 attracted more banks yesterday, with tenders more than double the P15 billion offering, Tan added.
The auction committee made a full award after tenders totaled P37.238 billion.
Tan said the tap facility would be opened until 3 p.m. today to cater to the strong demand for the said tenor.
“The auction went very well. (There was) very good demand, very auspicious for the year, very good pricing also so we fully awarded (the paper),” he said.
The Bureau of Treasury (BTr) opens its tap facility if it received strong demand for the debt paper at a very good price to take advantage of the bids.
Average yield of the freshly issued paper stood at 3.364 while coupon rate is 3.375 percent.
The current average rate of the three-year paper is higher than the 3.169 percent it fetched during the auction of the same tenor on October 20, 2015.
Meanwhile, Tan said the central bank’s policy-making Monetary Board (MB) has issued the authority for the government’s 2017 foreign borrowing amounting to about $2 billion.
“We were informed that it was approved already but we will be expecting the copy of authority soon in the office,” he said.
Tan said $500 million of the said amount would be new money component, or cash, while the remaining $1.5 billion will be used to retire old liabilities.
He said they are now discussing with some banks on how to do the debt issuance and liability management but declined to elaborate.

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