PH launches up to $1-B global peso notes offer

MANILA, Philippines (UPDATED) – The Philippine government has launched a 10-year global peso notes issue to raise between $750 million and $1 billion for a debt buyback.

The minimum amount represents the remaining foreign commercial borrowing requirement of government for 2012.

Proceeds of the issue, which is expected to be priced later Thursday, November 8, will be used to repurchase expensive debt, allowing government to lengthen its maturity profile.

The Philippines tapped Credit Suisse, Deutsche Bank and HSBC as global coordinators for the transaction.

The is the first global peso notes offer this year. In January, the government raised $1.5 billion through an issue of 2013 global dollar-denominated bonds.

The Philippines, Asia’s largest sovereign debt issuer, first issued global peso bonds in September 2010, raising $1 billion then.

Ratings

The global peso notes launch comes on the heels of a credit rating upgrade from international debt watcher Moody’s.

Moody’s, along with two other international credit rating agencies Fitch Ratings and Standard & Poors, rates the Philippines one notch below investment grade.

Moody’s and Fitch Ratings rate the global peso bonds Ba1 and BB+, respectively, the same as the Philippines’ sovereign ratings.

Foreign borrowings

The government had programmed to borrow $4.02 billion from external sources this year, lower than the programmed $4.5 billion in 2011, according to finance data.

The government borrows from the local and foreign debt markets to fund the gap in its budget and revenues.

This year’s budget gap is expected to reach roughly P279 billion or 2.6% of gross domestic product (GDP), higher than last year’s P197.8 billion or 2% of GDP. – Rappler.com