The Philippines is keen on issuing more global bonds to plug its deficit this year if a plan to raise up to $1 billion in Samurai bonds proves too expensive, Finance Secretary Margarito Teves said on Wednesday. A global issue could be a cheaper option for Manila unless the Japan Bank of International Co-operation (JBIC) reduces a guarantee fee on the government's planned Samurai bond offer, Teves told Reuters.
"If (JBIC) cannot make the adjustment and the global bonds are still more attractive, and at a certain point we really need it, we may have to tap the global bond before the Samurai," Teves said shortly after meeting with JBIC officials in Manila.
Samurai bonds are yen bonds issued in Japan by non-Japanese entities. Teves said the government was also calculating the cost of converting any possible yen bond proceeds into dollars or pesos, though the funds could be used to pay off yen-denominated loans. He reiterated the government was looking at a range of global and domestic options to cover its deficit, which it expects to balloon to a record 250 billion pesos ($5.2 billion), or 3.2 percent of gross domestic product, this year. The local bond market has been spooked by the potential for increased local borrowing, driving yields higher.