Philippines hires six banks to manage domestic bond swap

MANILA (REUTERS) - The Philippine government has hired six banks to manage its planned domestic bond swap this year, a senior official said on Friday, but the timing and size of the offer have yet to be finalised.

State-run Land Bank of Philippines and Development Bank of the Philippines, BDO Capital and Investment Corporation, First Metro Investment Corp, BPI Capital Corp, and HSBC will run the deal, National Treasurer Rosalia De Leon said.

Manila plans to swap shorter-dated local debt for longer-dated tenors in an offer that may be launched before year-end as part of its debt-management programme.

Ms De Leon said the government is looking at issuing bonds with tenors of 10 and 20 years. "We would like to assess first the impact of the central bank's interest rate hike," Ms De Leon said when asked about the timing of the offer.

On Thursday, the central bank raised its main overnight borrowing rate by 25 basis points to 3.75 per cent, the first hike in three years, to stay on top of inflation.

The Philippines has been capitalising on a shift by investors to emerging markets to lengthen its maturities. It also wants to reduce foreign-exchange exposure by increasing the share of peso-denominated debt in total bond sales.

Manila's last domestic bond exchange was done in July 2011, when a record 323.5 billion pesos (S$9.2 billion) of new 2022 and 2031 bonds were issued. The debt exchange extended the average maturity of the local bonds swapped to 18 years from about 5.5 years.