The RFP has been sent out to the regions top investment banks seeking pitches to raise the remainder of its $3.1 billion in overseas funding.
As has been standard with the Philippines under Treasurer Omar Cruz, the principles of the RFP will leave a lot of areas wide open to interpretation for the respective investment banks.
ôItÆs what we would expect from the Philippines treasury,ö says one investment banker. ôWe are all aware of the amount that the sovereign needs to raise, and they have provided a bog standard bid process that allows us all to determine what structure would be best for this deal.ö
The Philippines needs $900 million to complete its funding requirements for the year. As Asia's largest seller of overseas debt, the Philippines has not issued bonds since it priced a $2.1 billion bond in early January. That deal was led by Citigroup, Credit Suisse, Deutsche Bank and UBS.
The Philippines was at one time something of a black sheep in the Asian debt capital markets. It had a tendency to play somewhat loose with its own funding targets. This saw the sovereign sell deals early in the year under the auspices of a restrained annual funding requirement and then re-tap the market for more than initially promised - leaving buyers somewhat underwhelmed about their initial investment.
However, under the leadership of Cruz, the Philippines has taken magnanimous steps to reinvigorate its reputation as a transparent and steady borrower.
Cruz has maintained a resolute approach in terms of his funding targets and has been unwavering in keeping them for the past few years - which has taken the sovereign from pariah status to one of the most sought after credits in Asia.
At the start of the year, most in the market had estimated that the Philippines would seek to raise upwards of $5 billion in 2006, however Cruz said that the sovereign would raise only $3.1 billion from overseas debt issuance, with the balance of the budget deficit shortfall sourced from multilateral and FDI sources and consolidated domestic investment.
Even in the face of a tempestuous peso, Cruz has maintained that his earlier offshore financing estimate of $3.1 billion. This approach should make the sovereign, once again, sought after when it does come to market.
¬ Haymarket Media Limited. All rights reserved.
