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Philippines ponders infrastructure bonds and linkers

Purisima says more local funding to come; Republic targets investment grade rating

The Republic of the Philippines is considering issuing more peso-denominated bonds in the local market to help fund infrastructure development, according to secretary of finance Cesar Purisima. Speaking to Euromoney on the sidelines of the Asian Development Bank meeting in Hanoi, Purisima said that infrastructure development is a top priority for the country and that peso-denominated 25-year bonds could be issued to help fund various projects.

“There’s over 1.5 trillion pesos in deposits at the central bank,” he says, “and we’re keen to tap into that local liquidity to help fund the pipeline of infrastructure development projects. The size of each bond would obviously depend on the project but we can now do 25-year bonds locally thanks to our work in extending the yield curve.”

Most sources familiar with the Philippines cite the lamentable condition of the aging Ninoy Aquino airport, and the controversy surrounding the barely-used new terminal 3, as the leading example of the indecision, corruption and delay that have hampered the country’s infrastructure development. But the country’s requirements go much beyond improving the international airport, as Purisima acknowledges, including domestic transport, tourism and power.

Asked whether he was considering issuing inflation-linked bonds, Purisima said that he would think about the measure but that his focus was on “continuing to aggressively manage liabilities, to extend maturities, lower borrowing costs and reduce the FX component.”

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