Bloomberg News

Philippines Buys Back $1.3 Billion Worth of Overseas Bonds

October 15, 2011

(Adds savings in fourth paragraph.)

Oct. 15 (Bloomberg) -- The Philippines will spend about $1.7 billion buying back $1.3 billion worth of foreign-currency debt in its bid to better manage liabilities and win a higher credit rating.

The exercise was “in line with our on-going objective to rebalance our debt portfolio in favor of local currency,” Finance Secretary Cesar Purisima said in a statement today in Manila. “This should be supportive of our effort to obtain investment grade ratings.”

The $200 billion Asian economy is reducing its budget deficit, extending debt maturity and cutting its foreign- currency risks to achieve a higher credit rating. The administration of President Benigno Aquino had conducted bond exchanges and sold peso-denominated bonds to overseas investors since starting a six-year term in June 2010.

The government expects savings of around $165 million in “net present value” from the buyback, Finance Undersecretary Rosalia de Leon said today. Bonds due from 2013 to 2032 were accepted for purchase by the government in a transaction to be settled this month, according to the statement.

Of the $17 billion debt that qualified for repurchase, about $2.2 billion of bonds were offered by investors, the government said. The nation will use mostly internal funds for the buyback, and the $1.7 billion figure includes accrued interest along with the bonds’ original price, it said in the statement.

“This exercise highlights our strong liquidity and prudent debt management policy amid global volatility,” Treasurer Roberto Tan said in the statement.

Citigroup Inc. and JPMorgan Chase & Co. were the arrangers, helped by Goldman Sachs Group Inc., HSBC Holdings Plc., Standard Chartered Plc and UBS AG.

--With assistance from Max Estayo in Manila and Paul Tighe in Sydney. Editors: Paul Tighe, Nicholas Wadhams

To contact the reporter on this story: Clarissa Batino in Manila at cbatino@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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