Philippines Buys Back $1.3 Billion Worth of Overseas Bonds

The Philippine Finance Secretary Cesar Purisima said Saturday (October 15, 2011) that the government's successful buyback of some foreign-currency sovereign bonds should help the country's cause to win investment-grade ratings from credit agencies.

Around $2.2 billion of the eligible $17.7 billion of global and euro bonds have been offered by bondholders in the Philippines' latest liability management efforts, which sought to repurchase around $1.5 billion in foreign debt. The government accepted bonds with nominal principal amount of $1.3 billion and will pay bondholders a total $1.7 billion, including the purchase price and accrued interest.

Of the $17 billion debt that qualified for repurchase, about $2.2 billion of bonds were offered by investors, the government said. The nation will use mostly internal funds for the buyback, and the $1.7 billion figure includes accrued interest along with the bonds' original price, it said in the statement.

The $200 billion Asian economy is reducing its budget deficit, extending debt maturity and cutting its foreign- currency risks to achieve a higher credit rating. The administration of President Benigno Aquino had conducted bond exchanges and sold peso-denominated bonds to overseas investors since starting a six-year term in June 2010.

Purisima said the bond repurchase is "in line with our ongoing objective to rebalance our debt portfolio in favor of local currency. This should be supportive of our effort to obtain investment-grade ratings," he added.

The government expects savings of around $165 million in "net present value" from the buyback, Finance Undersecretary Rosalia de Leon said. Bonds due from 2013 to 2032 were accepted for purchase by the government in a transaction to be settled this month, according to the statement.

"This exercise highlights our strong liquidity and prudent debt management policy amid global volatility," Treasurer Roberto Tan said in the statement.

Despite recent upgrades from all three major credit agencies, Philippine debt still remains in junk territory. Fitch Ratings ranks Philippine debt a notch below investment grade while Standard & Poor's and Moody's Investors Service both place Manila's debt two notches below investment grade. A higher rating should save the Philippines, one of Asia's most prolific sovereign debt issuers, millions in debt services annually.

Purisima said the invitation to sell bonds back to the Philippines drew both local and international investors, and bonds accepted by the government have maturities spanning 2013 and 2032.

The bond repurchase will be financed with internal funds of the National Treasury. The government is currently offering to the public 10-year and 15-year peso-denominated retail treasury bonds, and hopes to raise over ₱200 billion (Php) Philippine Peso in the bond sale, the proceeds of which may also be used to pay for the repurchased foreign-currency bond.

National Treasurer Roberto Tan said the liability management exercise underscores the Philippines' "strong liquidity and prudent debt management policy amidst global volatility."

The transaction is expected to be settled on October 25, 2011.

For more updates, follow the Hikot's Philippines Economy Network.

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Philippines unveil 72 billion-peso ($1.7 billion) Stimulus Package

Asian policy makers are bolstering efforts to protect their economies from weakening global growth, as Indonesia unexpectedly cut interest rates and the Philippines unveiled a stimulus plan.

Bank Indonesia lowered its reference rate by a quarter of a percentage point to 6.5 percent yesterday, defying the predictions of all 15 economists surveyed by Bloomberg News. Philippine President Benigno Aquino announced a 72 billion-peso ($1.7 billion) spending package today as his government cut growth estimates, while Singapore's central bank is forecast by economists to say this week that it will slow or end its currency appreciation.

"We want to be ahead of the curve in anticipating the impact of the global economy," Perry Warjiyo, Bank Indonesia's director of economic research, said in a Bloomberg Television interview today. "It will impact through the region, and we will see there is a decelerating trend of inflation and a downward revision to economic growth. Sooner or later, central banks need to rebalance the preference of their monetary policy response."

Emerging-market nations have turned from fighting inflation to supporting growth as a struggling U.S. recovery and deepening European crisis threaten the global economy. Brazil, Turkey, Russia and Pakistan have cut borrowing costs in 2011, while Asian countries from the Philippines to South Korea have refrained from further rate increases in recent weeks.

Taking Insurance

"It's primarily because of the weaker global economic backdrop that they are taking out some insurance against the global economic headwinds," said Leif Eskesen, a Singapore- based economist at HSBC Holdings Plc.

The MSCI Asia Pacific Index of stocks has slumped 15.4 percent this year as investors pare bets on emerging markets. Some Asian currencies have tumbled against the dollar in the same period, led by a slide of about 9 percent in the Indian rupee, according to data compiled by Bloomberg.

Indonesia's rupiah has weakened 3.5 percent in the past month. Bank Indonesia said yesterday it has sufficient foreign- exchange reserves to support the currency.

"We are confident we can stabilize the market," Warjiyo said in the interview today.

Asian nations from Malaysia to the Philippines are shifting their focus to shielding growth even as elevated inflation prompts policy makers in countries such as Vietnam and India to persist with monetary tightening.

India's industrial output rose 4.1 percent in August from a year earlier, less than the median 4.7 percent estimate in a Bloomberg News survey, a report showed today.

Philippine Spending will boost

Aquino said today the additional spending he authorized for the stimulus package includes 5.5 billion pesos for infrastructure. The Philippine government cut its growth forecasts for the Southeast Asian nation for 2011 and 2012.

"If the fiscal stimulus does its job, this should give the necessary push to keep our economic growth in a solid upward trajectory," central bank Governor Amando Tetangco said today. The Philippines has sufficient liquidity, a stable exchange rate and a "manageable" inflation outlook along with "fiscal space" to help support economic growth, he said in an e-mail reply to questions.

Bangko Sentral ng Pilipinas will consider global developments, including Indonesia's rate cut and the slump in Philippine exports in next week's policy meeting, Tetangco said.

"In most jurisdictions, inflation seems to have become less of a pressing concern," he said. "The weakness in advanced economies is seen to weigh more on emerging economies than previously anticipated."

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NKorean leader's grandson arrives to study in Bosnia‎

KIM: A grandson of reclusive North Korean leader Jong IL Kim arrived in Bosnia on Wednesday 12^th October 2011 to study in an international school for the next two years, a police source said.

A border police spokeswoman said 16-year-old Han Sol Kim entered the country at Sarajevo airport Wednesday afternoon on a regular flight from Vienna."A North Korean national arrived at 2.20 pm (1220 GMT)," according to local border police spokeswoman Sanela Dujkovic.

Dujkovic said the "passenger had a valid visa and passport," thus satisfying all conditions to enter the country.

Bosnia-Herzegovina - Officials in Bosnia said North Korean leader Jong IL Kim's grandson has arrived in the country to enroll at a private high school made up of international students.

He will be the first student from North Korea to attend the United World College's branch in the southern city of Mostar, school spokeswoman Meri Musa said last week. In some nations, a college is equivalent to a high school.

Mostar is 60 miles (100 kilometers) south of Sarajevo and the school, opened in 2006, has 124 students from 34 countries, including Iraq, Israel and the Palestinian territories

Musa said that Han Sol Kim will be treated like all other students and will be living in a dormitory.

The United World Colleges (UWC) in the Bosnian town of Mostar said last month it had accepted Han Sol Kim as a student.

According to the school, the enrollment of the grandson of the leader of one of the most secluded countries in the world was the result of a special outreach program for North Korea the UWC network has.

Media reported that the 16-year-old's father is Jong Nam Kim, the North Korean leader's exiled eldest son. The couple is said to have lived in Macau since the father fell out of favor with Jung IL Kim 2 years ago.

Jong Nam Kim the father of Han Sol Kim is said to be weak as he tried to oppose his father's decision Jong Il Kim in ruling the communist state. Jong Nam preferred to rule the North Korea with democracy opposite to his father's want for a total authoritarian system.

Analysts said if Jong Nam will be the successor of Jong IL Kim then it could be the end of communist country as He wants to give more freedom to the North Korean people than controlling them.

Jong Nam Kim is understood to have once been the one to beat to succeed the North Korean leader. But the youngest son Jong Un Kim is now being groomed to take over one of the world's most isolated countries. 

The UWC is a network of school and colleges throughout the world, attended notably by pupils from war-affected areas, and aimed at promoting international and intercultural understanding.

The southern Bosnian town of Mostar was the scene of violent clashes between the country's Croats, Muslims and Serbs during its 1992-1995 war.

Sixteen years since the end of the war it still remains a symbol of inter-ethnic divisions in the Balkan country.

Many people are concern about the security of the young boy (Han Sol Kim) in Bosnia as several activists around the world hates the government of Jong IL Kim.

Many are worry that the innocent boy would be a victim of discrimination or abuse as his grandfather is known of his communist government.

Even though Han Sol Kim is a grandson of the communist leader in the North Korea, it doesn't mean that he has a reclusive attitude as even his father was exiled to Macau for opposing his father's system of government.  

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