RP RAISES 350-M EUROS IN BOND OFFER

MANILA, July 29 , 2004 (STAR) The government raised 350 million euros after reopening a eurobond facility due on Feb. 22, 2010, the Department of Finance (DOF) reported yesterday.

The latest move means the government has raised a total 650 million euros after the 300 million euros raised early last year, when the facility was first launched, the department added. "The republic decided on the total amount, following receipt of orders in excess of 700 million euros within a 24-hour marketing period," it said. The bonds were sold at a re-offer price of 103.25, or a re-offer yield of 8.35 percent.

The DOF said proceeds from the bond issue will be used to refinance the government’s 350 million euro eurobonds, which carry a yield of eight percent and mature in September. "We were presented with a sensible refinancing solution to our bond deal maturing in September and we decided to accept the offer. This accomplishes a number of objectives, including diversifying our funding sources and extending our maturity by six years," Finance Undersecretary Eric Recto said.

Credit Suisse First Boston and Deutsche Bank were joint lead managers and book-runners of the deal. This is the largest euro-denominated transaction in Asia so far this year, the department said. Standard & Poor’s Ratings Services has assigned a "BB" debt rating to the reopened euro-denominated 9.125-percent bond. "The sovereign credit ratings on the Philippine government are supported by the country’s adequate external liquidity," S&P said in a statement. It added that the country’s total debt service – projected at 30 percent of current account receipts in 2004 – is similar to the median level of rated peers.

However, the ratings agency expressed concern over the country’s "high" budget deficit and increasing debt. It said it expects the budget deficit to remain high at over four percent of the gross domestic product (GDP) due to weak tax collection and a narrow tax base, while government debt – excluding amounts it guaranteed and lent to public-sector corporations – is approaching 84 percent of GDP this year. This level is relatively high compared with the median level of 51 percent for similarly rated sovereigns, S&P credit analyst Agost Benard said.

Interest payments for these debts will eat up roughly 37 percent of government revenue, sharply higher from only 22 percent in 1999, he added. "The weak fiscal profile and shallow domestic capital markets force a continuing dependence on external capital to accelerate economic growth, raising the vulnerability of Philippine financial markets to adverse external developments and constraining macro-economic stability," Benard said.

The mounting debt of state-run National Power Corp. (Napocor) also places additional pressure on the government’s fiscal burden, he added.

Food firms, retailers sign pact to keep prices stable By Marianne V. Go (Star) 07/29/2004

Local food manufacturers and retailers signed yesterday a resolution agreeing with the Arroyo Government to keep the prices of basic necessities and prime commodities stable.

Representatives of the Tin Can Manufacturers Association of the Philippines, the Coconut Oil Refiners Association, flour millers, bakers associations, retailers and canned good manufacturers signed the resolution during the regular meeting of the National Price Coordinating Council yesterday. According to Trade Undersecretary for Consumer Welfare and Trade Regulation Adrian Cristobal Jr., the resolution ensures a long-term cooperation with local manufacturers and retailers to keep prices stable. Cristobal reported that based on government monitoring in the National Capital Region (NCR), prices of basic necessities and prime commodities such as rice and sugar remain stable.

The items which showed some price increase since March, but have now stabilized, include hard flour and chicken, while the prices of soft flour, cooking oil and pork have also stabilized at slightly lower prices. Retail prices of vegetables, Cristobal assured, have also gone down, while the price of staple fish such as tilapia and bangus are stable.


Reported by: Sol Jose Vanzi

© Copyright, 2004  by PHILIPPINE HEADLINE NEWS ONLINE
All rights reserved


PHILIPPINE HEADLINE NEWS ONLINE [PHNO] WEBSITE