Philippines calls floating-rate, interest reduction bonds

By Angela McDaniels

Seattle, Nov. 14 - The Republic of the Philippines will call all of its outstanding series A floating-rate bonds due 2010, series B floating-rate bonds due 2009, series A interest reduction bonds due 2007 and series B interest reduction bonds due 2008, according to a news release.

The government must give notice to bondholders at least 30 days before the redemption.

The four series of bonds have a combined principal amount of $165.3 million outstanding, which represents 57% of the government's $291.3 million Brady bonds that will be outstanding as of Dec. 1.

The Philippines said it will use its liquidity position to fund the redemption.

The redemption is part of the government's debt management strategy and is intended to reduce its dependence on foreign borrowings and the cost of its external debt service, according to the release.

The government said the redemption will reduce external debt by $165.3 million and generate roughly $1.2 million of annual interest expense savings.

This is the second time that the Philippines has exercised the call option on the Brady bonds. The first was on June 1, when the government called the $410 million principal amount outstanding of its series B principal collateralized interest reduction bonds.

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