Metrobank's FMIC files unsolicited proposal on govt's inflation-linked bonds

First Metro Investment Corporation (FMIC), the investment vehicle of the Metrobank group, has submitted an unsolicited proposal for inflation-linked bonds (ILBs) which the government earlier said it may issue in the fourth quarter. 

 

In an ambush interview with reporters after a briefing Thursday, FMIC president Roberto Juanchito Dispo said, “Our proposal is more of a program where they can issue [ILBs] by tranches. Hopefully, it would be done within the year.”

 

He said there is no indicated amount yet, but  just to test the market the government would likely consider P10 billion as initial volume.

 

The Bureau of Treasury, Dispo said, “is currently reviewing in terms of suitability to the Philippine local capital market.”

 

ILBs eliminate the risk of inflation eating up returns on a particular issuance, making them more attractive to investors.

 

Bloomberg earlier quoted National Treasurer Rosalia de Leon saying the government was mulling over the issuance of inflation-indexed bonds in the fourth quarter to help lessen government's borrowing costs.

 

“Inflation numbers are sometimes adjusted even if they announced it already to time restatement of something to us that may bring some administrative concerns because inflation-linked bonds are paid using inflation essentially as your coupon,” Dispo noted.

 

“If you do restatement, that would lead to recalculations of coupon but I think Philippine government is looking at other models,” he said, referring to the FMIC proposal. 

 

On RTBs 

 

The government, meanwhile, could be mulling the issuance of 10 or 15-year tenored retail treasury bonds (RTB) with issue size of some P100 billion, depending of fiscal requirements, said Dispo. 

 

He said RTB issuance will push through anytime within the year.

 

According to a source privy to the planning, the government may issue RTBs as “early as the third quarter.” She asked not to be named as she was not authorized to speak on the matter. — Sieg Alegado/VS, GMA News