A new issuer from the Philippines

The Philippines National Oil Corporation(PNOC) issues a request for proposals (RFP).

Banks have been asked to submit proposals for a $200 million 10-year deal for government-owned PNOC, the parent company of PNOC-EDC, which is also about to launch a $150 million syndicated loan.

Submissions are due by December 5 and the company is said to be targeting a launch date in January in order to re-finance a syndicated loan, which falls due early next year. The transaction will be backed by a full sovereign credit guarantee and if it emerges, will mark a debut offering for a group responsible for the country's exploration and production of indigenous energy sources. However, given that sovereign guaranteed debt by the National Power Corporation (Napocor) now trades at a huge premium of more than 200bp to the sovereign curve, there are no clear pricing benchmarks.

And observers say that while the prospective deal size is small it will only add to the crushing debt burden the Philippines is carrying into next year to finance its budget deficit and Napocor. Bankers estimate that the Philippines will need to raise up to $4 billion in 2003 and the combined impact of supply pressures, negative ratings momentum and fading investor support have put pressure on spreads.

At the 10-year part of the curve, the sovereign has a February 2013 bond outstanding, which was priced two weeks ago with a 9% coupon and is currently trading below par at 97.5% to yield about 9.38% or 517bp over Treasuries.

PNOC's geothermal arm, PNOC-EDC has previously visited the bond market three times. Having made its debut in 1993 with a $90 million deal, the unrated group followed this up in 1996 with a $150 million five-year deal via Morgan Stanley, which was launched at a spread of 170bp over Treasuries and coupon of 8.5%. Then just over a year ago, the deal was re-financed with another five-year deal privately placed by JPMorgan in late September.

It is just about to access the syndicated loan market with a two tranche deal led by BDO, Bank of Nova Scotia, Barclays, BNP Paribas and ING Bank. Set to raise up to $150 million, one tranche will have a five-year bullet maturity and one tranche a five-year final maturity with a four-year average life. Bankers say that pricing has not yet been finalised.