RP eyeing 5-10 yr reconstruction bonds
MANILA, Philippines
A Philippine state agency plans to sell reconstruction bonds of up to P50 billion ($1.1 billion) in 5- to 10-year maturities to fund rebuilding after recent devastating typhoons, Trade Secretary Peter Favila said on Thursday.
Favila told Reuters the government has yet to decide whether the amount will be raised in one offer or in tranches, but the National Development Corp (NDC) has discussed the debt issue with government financial institutions and private banks interested in participating in the offer.
“Between 5 to 10 years, that’s my proposal,” Favila said when asked about the possible maturity of the debt offer.
“NDC will be the issuing entity backed up by a guarantee from the national government. There is interest in the bonds, they (government and private banks) also want to help in rehabilitating calamity-affected areas.”
He said the government hopes to sell the bonds possibly in the next few weeks, if documentary requirements were speeded up.
Finance Secretary Margarito Teves said the government has to identify projects that need financing prior to the bond sale.
“Investors would likely be more receptive or responsive if they can identify themselves with the projects to be funded,” Teves told Reuters in a mobile phone text message.
Two typhoons in two weeks destroyed about P18.4 billion in crops and fisheries and around P5 billion worth of infrastructure in the northern Philippines, including the capital Manila.
President Gloria Macapagal Arroyo said on Wednesday the government was keen to raise funds through the offer of NDC bonds, foreign aid and grants and cheap loans from development lenders to finance the rebuilding of typhoon-hit provinces in the north, including the country’s main rice-producing areas.
She said market borrowing would be the last funding option.
Arroyo said development lenders like the Asian Development Bank and the World Bank may also subscribe to the NDC bonds.
“What the president meant was anybody can buy it, but it’s not a retail offer,” Favila said.
Manila is hoping to conduct an international pledging session possibly in November with the help of the World Bank and the United Nations to raise grants and aid from the foreign donor community to fund rebuilding efforts.
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