Manila hires 8 banks for retail bond issue


Posted at Aug 02 2010 03:41 PM | Updated as of Aug 02 2010 11:41 PM

MANILA, Philippines - The Philippines is a step closer to issuing retail Treasury bonds to refinance maturing debt after it hired 8 local banks to manage the planned offer, a senior official said on Monday.

"Bureau of Treasury is considering issuing 5, 7, and 10 year tenors," National Treasurer Roberto Tan said in a mobile text message to reporters, adding that the timing of the issue was still being finalised.

The government aims to sell the retail bonds to small investors, with a minimum investment of P5,000 ($110), sometime in August, Tan had earlier said.

He said the government has given the mandate to BDO Capital, BPI Capital, Development Bank of the Philippines, First Metro Investment Corp., Land Bank of the Philippines, Metropolitan Bank & Trust Co., Philippine National Bank and Rizal Commercial Banking Corp.

Officials have said they will auction an initial P20 billion to P30 billion of the retail bonds to refinance maturing debt, but the government usually raises the final sale amount if demand is strong.

In May, Tan said Manila has P36.47 billion worth of 3-year retail bonds with a coupon of 6.875% due in August, and another P38.67 billion of 5-year debt with a coupon of 10.625% maturing in September.

Bond traders expect the government to sell as much as P100 billion of the retail bonds, but Tan had said the actual issue size may be lower than market estimates. Last year, total retail bond issuance was more than P100 billion.

The Philippines, Asia's largest sovereign issuer of foreign currency debt, relies heavily on local and foreign borrowing to finance its fiscal deficit.

It also wants to issue global peso bonds before the end of the year to fund this year's shortfall expected to reach P325 billion, or 3.9% of GDP, a record in peso terms.