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The Philippines government said on Monday it would prepay 57 percent of its remaining $291.3 million worth of Brady bonds, the second such prepayment this year to cut its debt levels and interest costs.
The government would use the call option on all of its outstanding floating rate bonds and interest reduction bonds, with an estimated principal of $165.3 million, the Bureau of Treasury said in a statement.
In June, the government called $410 million of its costly Bradys. The amount referred to the then outstanding principal collaterised interest reduction bonds Series B.
"This prepayment is part of the debt management strategy of the national government intended to reduce its dependence on foreign borrowings and the cost of its external debt service," the Treasury said. The Brady bonds, which take their name from former US Treasury Secretary Nicholas Brady, were originally issued in 1992 as part of the government's debt restructuring programme.
The Southeast Asian country wants to take advantage of strong dollar inflows and higher state revenues to cut its debt of about $79 billion and reduce its dependence on borrowing to fund its budget deficit.
The floating rate bonds to be retired this time are due to expire in December 2009 and June 2010, while the interest reduction bonds are due to expire in December 2007 and June 2008. "The yield curve of the Philippines suggests that the Philippines will generate an estimated savings of about 73 basis points of the amount being retired under this prepayment," the statement said.

Copyright Reuters, 2006

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