PNoy approves peso bond swap to manage local debt

President Benigno S. Aquino III has approved a peso bond swap as part of efforts to manage the country’s P4.6-trillion domestic debts, a Palace official said Thursday. In an interview with Palace reporters, Presidential Communications Development and Strategic Planning head Ricky Carandang said Aquino approved the bond swap on Wednesday, two days after the Bangko Sentral ng Pilipinas gave it the green light. “The peso bond swap does two things. First of all, it stretches out our [debt] maturities," he said. “One of the goals is to make sure that the maturities of our debts don’t bunch up and that they’re stretched out so that we have some fiscal breathing space. Peso bond swap exchanges five- and seven- year bonds for 25-year bonds, so longer maturities." Carandang explained how the bond swap may impact on capital markets: “The other thing is it will also hopefully deepen the capital markets. There are very few long-term instruments like 25-year bonds out there so this is going to be a step in deepening the capital markets." In a separate interview in Malacañang, Finance Secretary Cesar Purisima said it is now up to National Treasurer Roberto Tan to execute the swap. “He has to execute it in a manner that is good for the country. If the pricing is favorable then we do more, if the pricing is not favorable then we don’t do as much," Purisima said. Purisima likewise said the peso bond swap will be good for the country’s capital markets. He noted that the shift to longer debt maturities would “be good for future infrastructure proponents, even for individuals, in the future [as] the availability of longer-term loan in the country will now be more common." — VS, GMANews.TV ERRATUM: The above article as initially published on this site contained a typographical error in the word SHIFT, which has since been corrected. Our apologies to readers.