Manila expects to price bond 'in days'

Manila expects to price bond 'in days'

Dow Jones, Bali, Indonesia

The Philippines expects to price its planned global bond offer within a matter of days, the country's top finance official said in an interview on Saturday on the sidelines of the Asia-Europe Meeting.

"It should happen sometime soon...in days," Finance Secretary Jose Isidro Camacho told Dow Jones Newswires. "In days, we expect to hear from (the underwriters) about what the reception has been. It's really just a question of getting feedback from investors," he added.

The government has mandated Citigroup Global Markets, Deutsche Bank Securities and JP Morgan as joint bookrunners for the sovereign bond, which is likely to be worth at least $500 million to cover the financing requirements of state utility National Power Corp., or Napocor. The issue will likely have a maturity of 10.5 years.

In the Philippines, people close to the matter said last week that the offering could reach as much as US$1 billion, to cover both Napocor's requirements and part of the government's own funding needs.

The government has a foreign financing requirement of $400 million over the rest of the year, down from the originally set $900 million after the government raised extra funds from the issuance of local retail treasury bonds.

Camacho declined to confirm the size of the Napocor bond, saying it was "too early to say" how the government will raise the $400 million foreign financing requirement. "We'll keep our options open. There's no urgency at the moment" because of the successful treasury bond issue.

The sovereign debt issue is in lieu of a $500 million global bond that Napocor scrapped last week due to the high yield sought by investors.

The market was asking for about 125 basis points over Philippine sovereign notes, mainly because of the fear that investors might get stuck with Napocor bonds, while the sovereign is more liquid, Camacho said.

"We'd rather have the Republic of the Philippines do the issue and lend it on internally to Napocor," he said. Last year, the government lent Napocor $750 million due to poor demand for debt issued directly by the company.

On the budget deficit, the secretary said he was confident the country will meet its 2002 budget deficit target of 202 billion pesos this year.

"We're certainly going at a pace where we should be able to meet that comfortably," he said.

In the first five months, the deficit was 75.4 billion pesos, lower than the target 88.6 billion pesos for the period.

That trend is likely to continue in June's deficit figures - which haven't yet been released - due to rising customs receipts and tighter expenditures in the month, Camacho said. "The June numbers are looking good," he said

Last year, the government's budget deficit hit a record high of 212.7 billion pesos.