Domestic debt swap fetches P388B in offers (Philippines Daily Inquirer)

THE GOVERNMENT attracted about P388 billion in tender offers for the exchange of state debt paper with new benchmark bonds, National Treasurer Roberto B. Tan said.

In a text message on Saturday, Tan said the Bureau of the Treasury would determine today the volume it would accept to be swapped, after assessing the exchange price.

Tan said the coupon rate would be announced on Tuesday morning and settlement would be on Wednesday.

Last Aug. 27, the government launched a domestic debt swap to inject more liquidity into the market amid external volatility. The debt swap offer ended last Friday.

Bondholders of certain eligible government securities can swap their bonds for new benchmark bonds due 2025 and 2040, for which the government had set a minimum issue of P50 billion each. The government can accept a maximum of P300 billion in bonds to exchange.

The new 10-year bonds have a minimum coupon rate of 3.625 percent, while the rate for 25-years bonds is 4.625 percent.

The proceeds from the sale of new benchmark bonds (new money component) will be primarily used to settle accrued interest payable to bondholders of accepted eligible bonds in the exchange component and other transaction-related expenses. The balance will be used for general budgetary purposes, the Treasury had said.

Tan earlier noted that the government would save P2.4 billion in interest expense from this transaction.

The debt swap was aimed at getting rid of illiquid International Securities Identification Numbers or ISINs, which identify specific securities.

The government had wanted to undertake domestic liability management ahead of any US Federal Reserve move to raise interest rates.

The joint deal managers for the debt swap transaction were BDO Capital and Investment Corp., BPI Capital Corp., Citicorp Capital Philippines Inc., Deutsche Bank AG Manila Branch, Development Bank of the Philippines, First Metro Investment Corp., Land Bank of the Philippines and the Hong Kong and Shanghai Banking Corp. Ltd.