Gov't exceeds target in latest bond swap

MANILA, Philippines - The Philippines has accepted tenders more than double its minimum target for its latest bond exchange transaction, which has resulted in P2.4 billion in government savings in the first year.

A total of P237 billion in new 10-year and 25-year bonds were swapped with eligible maturing obligations in an exercise meant to lower the country's interest payments and lengthen debt payment terms, the Bureau of the Treasury said on Monday.

Broken down, a total of P121 billion in 2025 bonds and P142 billion worth of 2040 securities were exchanged with illiquid debts or those no longer traded. The government had set a minimum P50-billion target for each maturity, but total tenders reached as high as P388 billion.

The bonds were priced at the minimum coupon rates of 3.625 percent for the 10-year tenor and 4.625 percent for the 25-year paper.

"The transaction has helped the Republic achieve its debt management objectives while also providing investors with new benchmark bonds in exchange for illiuid bonds," Finance Secretary Cesar Purisima was quoted in the statement as saying.

"Amid turbulence around the world, the overwhelming response we received from the market is an unequivocal show of strength and stability on the part of the republic," he added.

Aside from the bond exchange, the Philippines also put on offer fresh 25-year bonds for purchase by cash. A total of P9.6 billion was accepted from tenders amounting to "approximately P21 billion."

The Treasury had said earlier that proceeds from the new 25-year bond offer will be used to settle interest payments and fees for the bond swap. The remaining amount will form part of the government's general fund.

"We are pleased with the unwavering support from the market. We will continue to work with investors to ensure that the Republic maintains an efficient debt portfolio, while achieving competitive funding rates," National Treasurer Roberto Tan said in the same statement.

The Philippines launched its latest offer last August 26.