Manila (Philippine Daily Inquirer/ANN) - Preparations for the issuance of as much as US$1 billion worth of global peso notes are well underway, according to the Philippines' Department of Finance (DoF), which is now in talks with three banks that may serve as lead arrangers for the international bond sale.
"We are looking at working with three banks for the issuance of the global peso notes," Rosalia de Leon, head of the international finance group of the Department of Finance, said in a phone interview.
De Leon cannot disclose the identities of the banks at the moment because the process that will allow the government to tap the services of the banks has yet to be completed.
The Department of Finance has already secured the Bangko Sentral ng Pilipinas' (BSP or central bank) approval for the issuance of the bonds in the international capital market, as well as the sale of another $500 million worth of bonds in the domestic market.
The bulk of the proceeds from the bond sale will go to the settlement of the government's maturing obligations.
The Bureau of the Treasury, an attached agency of the DoF, hopes to conduct the bond sale soon after the DoF approves the three banks that will serve as lead arrangers.
But Finance Secretary Cesar Purisima said the bond sale would have to be properly timed, when the market is not jittery.
The government hopes to give the bonds a long-term maturity as part of its liability management strategy. By issuing bonds with a longer tenor, the government is able to extend the average maturity of its outstanding debts.
The bonds are also planned to be denominated in pesos, because the government wants to avoid increasing its exposure to foreign exchange risk, Purisima said yesterday.
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