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Accessing the International

Debt Capital Markets


Roberto B. Tan
National Treasurer
Republic of the Philippines

November 2009
Agenda

„ The Philippine Experience


• Recounting an Evolution
• Borrowing Strategy is not Execution Strategy
„ Execution Strategy
• Extracting value from the US SEC Shelf
„ Proactive Initiatives
• USD Bond Exchange
• Peso Bond Exchange
• The Warrants
„ Key Take Aways
The Philippine Experience

„ The Mid-90’s
• ROP accessed the international bond markets in
October 1996 (ROP due 2016)
• BSP in the international bond market
• ROP in the loan market
• Underutilizing the Peso market
„ The Late 90’s / early 2000’s
• A “frequent” borrower – opportunistic but not
strategic
„ 2004
• Redefining a borrowing strategy
„ Present
• Taking the cue from investors
Recounting an Evolution
27-Apr-04 ROP 8.375% 2011 (Tap) $200

27-Apr-04 ROP 8.250% 2014 (Tap) $200

29-Jun-04 ROP 9.375% 2017 $750


6 tranches / $445m ave size
27-Jul-04 ROP 9.125% 2010 (E350m) $525

8-Sep-04 ROP 8.875% 2015 $300

8-Sep-04 ROP 10.625% 2025 $700

26-Jan-05 ROP 9.500% 2030 $1,500

9-May-05 ROP 8.875% 2015 (Tap) $300

9-May-05 ROP 9.500% 2030 (Tap) $700 4 / $875m


7-Sep-05 ROP 8.000% 2016 $1,000

4-Jan-06 ROP 6.250% 2016 (E500m) $750

4-Jan-06 ROP 7.750% 2031 $1,000

25-Jul-06 ROP 8.000% 2016 $300


4 / $675m
25-Jul-06 ROP 7.750% 2031 (Tap) $450

10-Jan-07 ROP 6.375% 2032 $1,000 1 / $1.0b


29-Jan-08 ROP 6.375% 2032 (Tap) $500
1 / $500m
7-Jan-09 ROP 8.375% 2019 $1,500

13-Jul-09 ROP 6.50% 2020 $750 3 / $1.08b


23-Oct-09 ROP 6.375% 2034 $1,000
Borrowing Strategy …
is not Execution Strategy
„ Internal coordination and support
„ Capitalizing on the domestic bid
„ Offshore versus onshore funding
„ Building a Curve
„ Separating the Marketing from the Execution
• Maximizing the Non-Deal Roadshow
• Picking up the phone when investors call
„ Updating the Ratings Agencies
„ First mover advantage
„ Continuity despite changing of guards
Execution Strategy

„ The US SEC Shelf


• Key for timely issuance
„ Separate the Marketing
process from Execution
„ Managing the signaling
effects
„ 3-5 days from
mandate-to-market
• Jan.4’06 : EUR+$
• Jan.7’09 : Lehman
• Oct.16’09 : Contingency
Proactive Initiatives

„ The USD bond exchange


• Objective: To lengthen duration and mitigate
refinancing risk
„ The Peso bond exchange
• Objective: To create liquid Peso benchmarks to
encourage trading, pricing
„ The Warrants
• Objective: Allow local lenders to “pair” their USD
holdings with warrants , to address risk weighting
Key Take Aways

„ We learned from mistakes


„ Involve the stakeholders
• The agencies in government
• The local and international investors
„ Transparency and trust
„ Create room for flexibility
• Documentation always ready to go
• Separate Marketing from Execution
„ Avoid borrowing when you need it most
Thank you