At least P100B to be issued via debt exchange

At least P100B to be issued via debt exchange

THE GOVERNMENT yesterday launched its first bond swap for the year, expecting to exchange a minimum of P100 billion worth of 10.5- and 20-year bonds for shorter-dated papers.

The Bureau of the Treasury has set a minimum coupon rate of 6.375% for the 10.5-year bonds and 8% for the 20-year papers. The minimum issue size was set at P50 billion each.

Bonds due on July 22, 2011 to April 28, 2021 may be exchanged for the 10.5-year securities, while notes maturing on March 14, 2022 to January 26, 2031 may be swapped for the 20-year debt papers.

A total of P1.911-trillion worth of government securities are eligible to be exchanged for the two tenors, of which P189 billion may be exchanged for the 20-year bonds and P1.732 trillion may be exchanged for both the 10.5- and 20-year tenors.
The seven-day offer period of the 10.5-year bonds maturing on January 19, 2022 and 20-year bonds maturing on July 19, 2031 started yesterday and will run until July 15. Final pricing is on July 15 and the settlement date is July 19.
“The bond exchange program will be used to finance the long-term infrastructure projects of the government under the public-private partnership, smoothen the country’s debt maturity profile, develop long-tenored benchmark bonds and boost liquidity in the secondary market,” National Treasurer Roberto B. Tan said at an investors’ briefing at the state-run Development Bank of the Philippines.
Roberto Juanchito T. Dispo, president of one of the deal managers, First Metro Investment Corp., said the swap will be a “pure exchange exercise, no cash payments will be will be accepted in exchange for the securities.”
Mr. Tan said noted that the Office of the President had approved “more than P200 billion worth of borrowing authority limit” for the transaction.
High demand for the 2022 and 2031 bonds is expected from the market, Mr. Dispo said, citing a stable outlook on inflation and high liquidity in the financial system. FMIC alone, he claimed, has received at least P50 billion worth of demand. -- Ann Rozainne R. Gregorio

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