Moody’s sees lower PH funding needs

MANILA–Moody’s Investor’s Service expects the Philippine government to lessen its total funding requirements in 2013 following successes in its debt consolidation program due mainly to continued improvement in fundamentals.

Over the weekend, the government concluded the swap of nearly $1.5 billion worth of dollar-denominated notes maturing in 2014 to 2032 and euro-denominated bond due 2016.

The government will finance the debt swap through the recent issuance of P30.8 billion worth of peso-denominated Global Peso Notes and the funds held by the Bureau of the Treasury.

“The tender offer and the recent pesodenominated global bond offering, aided by positive market conditions and the Republic’s strong liquidity position, allowed the Republic to manage its external liabilities through the redenomination of a portion of the Republic’s external debt into the local currency,” said Finance Secretary Cesar Purisima.

“The exercise will also reduce interest costs for the republic, avoid bunching up of maturities, and extend the duration profile of the Republic’s outstanding debt portfolio,” said National Treasurer Rosalia De Leon.

The government tapped Credit Suisse, Deutsche Bank, and HSBC as joint global coordinators for the exercise and they were helped by Citi, Goldman Sachs, JP Morgan, Morgan Stanley, Standard Chartered Bank and UBS, as joint dealer managers.

Moody’s, in its Credit Outlook report dated Nov. 19, said recent debt management exercise of the government “improves the sovereign’s debt profile by lowering interest costs, extending average maturities, and mitigating foreign currency risk.”

The report, penned by Moody’s Singapore Vice President and Senior Analyst Christian de Guzman, noted that weighted average time-to-maturity of the government’s obligations has increased by more than two years to over 10 years since the Aquino administration implemented its debt consolidation program upon taking office in July 2010.