GOVT  TO  BORROW  $250 MILLION  FROM  FOREIGN  SOURCES

MANILA
, June 30 , 2004
 (STAR)
By Des Ferriols  -  The Arroyo administration is borrowing $250 million from the international credit market, partly for relending to the National Power Corp. (Napocor) and partly to bankroll part of its financial requirements.

Officials had planned to get at least $500 million for the first of a two-tranche borrowing plan, mostly on behalf of Napocor, but the administration decided to reopen existing bonds of $250 million that are scheduled to mature in 2017.

JP Morgan is the underwriter for the latest bond offer.

The National Government itself completed its foreign borrowing as early as April but it has been forced to go back to the market to generate funding that it could lend to Napocor.

The government has reopened shortly before the elections last May existing bonds of $200 million each that are scheduled to mature in 2014 and 2011.

Finance undersecretary Eric O. Recto said the government needs to borrow $1 billion more this year, mostly for Napocor.

The borrowing has been approved by the Monetary Board in principle. Recto said that with the May elections issue now behind the NG, the market may be more receptive compared to the difficulties the government has been having in its domestic borrowing.

Interest rates across all tenors of Treasury bills have been going up over the last couple of months, with the Bureau of Treasury often rejecting bids that it considered too high and unsupported by volume.

Compounding the problem, according to sources, was the NGís "inevitable decision" to absorb P600 billion of Napocorís total debts in a bid to allow the power company to recover enough to address an imminent energy crisis.

Napocorís burden would add at least another P60 billion to the governmentís funding requirement. Adding the funds that it will need to sustain growth while paring down its budget deficit, it is estimated that the government will actually need an additional P100 billion.


Reported by: Sol Jose Vanzi

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