Hanjin unveils first Philippine-made 180 Meters Kaprijke LPG carrier for Belguim's Savery

First Philippine Made 180 meters long LPG carrier ship. image: philSTAR

Hanjin unveils first Philippine-made LPG carrier

SUBIC BAY FREEPORT, Philippines – Korea’s shipbuilding giant Hanjin Heavy Industry and Construction Co., Ltd.–Philippines (HHIC-Phil) recently unveiled the first-ever Philippine-made Liquefied Petroleum Gas (LPG) carrier.

The LPG carrier measures 180 meters in length, 29.4m in breadth and 18m in depth.

It was ordered by Belgian shipping company Exmar Shipping BVBA and was christened as “Kaprijke” by company owner Saverys family.

Construction of the LPG carrier began in June of last year.

The project has once again affirmed the world-class craftsmanship of Filipino workers in the global shipbuilding industry.

In a statement, HHIC-Phil president Jeong Sup Shim recounted the challenges the company had to go through in putting up the state-of-the-art shipyard in the country’s premier freeport.

He attributed the company’s success to the support of the Philippine government and outstanding work ethic of Hanjin shipyard workers.

“It is our company’s earnest desire and long term commitment to catapult the Philippines as the number one shipbuilding country in the world,” Shim said.

Citing the June 2015 edition of the shipping journal published by highly authoritative Europe-based Clarksons Research, “Both the Philippines and HHIC-Phil Inc. have been making great strides in the international business scene, motivating us to push ourselves to the limit to bring more prosperity not only for our company but also for our generous host – the Filipino people,” Shim further said.

“The Philippines is currently ranked fourth in the world in terms of order book by builder country with 2.1 gross compensated tonnage (CGT) for new vessel,” Shim said.

Hanjin Subic shipyard is the 10th largest shipyard in the world in terms of order book by shipyard, accounting for 1.8 GCT or 74 percent of the Philippines’ CGT for new vessels.

The shipbuilding company still has seven LPG carriers in the company’s order book to be delivered in the immediate future.

In 2012, HHIC-Phil Inc. put the country in the worldwide spotlight with the simultaneous inauguration of two Suezmax Crude Oil Tankers first ever built on Philippine shores.

HHIC-Phil Inc. has been building huge commercial vessels ranging from container ships to bulk carriers, crude oil tankers and off-shore structures mainly for overseas clients since 2008. Its Subic shipyard boasts of one of the largest drydocks in the world today.

The company has invested around $1.7 billion so far. Its shipyard is currently home to almost 29,000 workers and still counting.

HHIC-Phil operates a Skill Development Center, a multi-million world class training facility located at the heart of the Subic Bay Freeport’s Industrial Park. - philSTAR

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The Philippines and KR big winners from China's slowdown but Fearing Investors for MARCOS Jr bid for 2016 Presidency

The Philippines and South Korea are the big winners from China's slowdown

How panicked were investors last week about China's stock market plunge? Enough to treat the Korean peninsula, a place that was teetering on the brink of war, as a safe haven.

Even as policy makers braced for renewed military confrontation between North and South Korea, the won staged a rally.

It may be time to start counting Korea as a developed nation, rather than an emerging market. 

That's made South Korean assets one of the few bright spots in a dark time for emerging markets. On August 24 alone, investors yanked $2.7 trillion out of developing nations, with Indonesia, Malaysia and Thailand especially hard hit. It matched the violent September 2008 selloff after Lehman Brothers collapsed.

Back then, Korea was battered so hard that pundits were calling it the "next Iceland" and the "Bear Stearns economy". Now, together with the Philippines, it's one of Asia's only refuges from chaos.

It's not hard to explain why many Asian economies are suffering from China's slowdown. Exporters of commodities, who depended on a humming Chinese market, have especially suffered. But why are there such big outliers among battered emerging markets?

Less like lemmings

The answer is that investors are finally basing their decisions less on herd mentality than nuanced, case-by-case analyses.

"Emerging market investors have become a lot savvier," says economist Frederic Neumann of HSBC in Hong Kong.

"Gone are the days where emerging markets were all lumped into one bucket. Today, countries with stronger fundamentals are able to resist the spread of contagion washing over global financial markets."

Along with South Korea and the Philippines, Neumann notes that even some frontier economies, like Vietnam, "have weathered global financial turmoil with apparent ease".

The common link among the success stories is they've got the basics right since Asia's 1997 financial meltdown. They have healthier financial systems, greater transparency, stronger banks, sober national balance sheets, and reasonable current-account deficits.

Malaysia's reckoning, by contrast, is long overdue.

The ringgit is trading near 17-year lows because scandal-plagued Prime Minister Najib Razak cares more about staying in power than modernising the country's unproductive economy.

Meanwhile, Thailand's military junta is undoing much of the progress Bangkok made since the late 1990s in strengthening the rule of law. And for all its gripes that Indonesia is being unfairly lumped in with Asia's laggards, President Joko Widodo's administration is rapidly losing the trust of investors.

While there's still time to win it back, Widodo's first 315 days in office have been a case study in timidity, drift and lost opportunities.

Korea credible

Korea, by contrast, is on the "more credible side of the spectrum," says economist Marc Chandler of Brown Brothers Harriman.

Even though China's downshift and US interest rate hikes will eventually make a dent, the won was Asia's top performer last week. Its 2.7 percent gain almost matched the drop in the Chinese yuan since August 11.

Meanwhile, Korean bond yields are falling. It turns out that the world's central banks had it right last year when they boosted their Korean debt holdings. In 2014, they made up 45.4 percent of the foreign-held portion of Korea Treasury bonds, up from 41.8 percent a year earlier.

It may be time to start counting Korea as a developed nation, rather than an emerging market. Korea still faces many challenges, not least of which are its rogue family-run conglomerates. But its macroeconomic performance deserves the recognition it's receiving from investors.

The same goes for the Philippines. Since 2010, President Benigno Aquino has steadily improved his nation's debt position (winning investment-grade ratings in the process), attacked graft and drawn in waves of foreign-direct investment.

Last month, reporters asked Philippine central bank governor Amando Tetangco if he's worried about the spectre of economic crisis haunting Asia at the moment.

"There's a herd mentality," he said, "but there'll be differentiation."

So far, he's been proven right. The country formerly derided as the "sick man of Asia" has been standing its ground amid market chaos.

Still risks

Risks abound, of course. While South Korea's economic fundamentals are stable – it's growing at a rate of 2.2 percent with a 3.7 percent jobless rate – its high household debt of $458 billion is a concern.

Manila, for its part, faces an uncertain 2016 election, in which Ferdinand Marcos Jr, son of the dictator who ravaged the nation in the 1970s and 1980s, may make a bid for the presidency. History has shown that emerging markets are often just one bad leader away from relapsing into chaos.

For now, the relative stability washing over Korea and the Philippines underscores that steady leadership and long-term thinking matter. It also shows that global investors are getting better at identifying those factors in Asia. - Bloomberg / The Sydney Morning Herald

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Philippine natural and organic products to be featured in Maryland, USA trade show September

Nine Philippine companies will be joining the Natural Products Expo East, the largest natural, organic, and healthy products event in the US East Coast, from September 17 to 19 at the Baltimore Convention Center in Maryland. STAR/File photo

MANILA, Philippines — Nine Philippine companies will be joining the Natural Products Expo East, the largest natural, organic, and healthy products event in the US East Coast, from September 17 to 19 at the Baltimore Convention Center in Maryland.

The Philippine Department of Agriculture (DA) through the DA-Agribusiness and Marketing Assistance Service (AMAS) organized the following natural product exporters to participate in this event—Brandexports Philippines, Inc., Elemie Naturals Inc., GreenLife Coconut Products Philippines Inc., Nutramedica, Inc., Orich International Traders, Inc., Prime Fruits International, Incorporated, Sweet Pacific Foodfarms Product, Team Asia Corporation, and Tropicana Food Products Inc.

A variety of coconut products will be available to the American public such as coconut water, milk, milk powder, flour, cider vinegar, coconut nutraceutical products, desiccated coconut, coconut sugar, organic extra virgin coconut oil and virgin coconut oil beauty pearls. The coconut is known as the tree of life in the Philippines because of the seemingly endless list of products and by-products derived from all its parts.

Other Philippine products to be featured in the trade show are body products made from pili, handcrafted bath soaps, topical scalp products, vinegar, dried mangoes, noodles, juices and fruit juice drinks, camote (sweet potato) and banana chips, condiments and sauces.

Philippine Ambassador to the United States Jose L. Cuisia, Jr. expressed optimism in the growing share of the Philippines in the natural products market and encouraged US buyers to take advantage of the growing demand for such products.

“The Philippines has long been producing natural, organic, and healthy agricultural products as well as nutritionally-dense foods considered ‘superfoods’ abroad. The Natural Products Expo East is the perfect venue for sellers to bring their products to the attention of the US buyers. I am glad Philippine companies, with the help of the Department of Agriculture and our Agricultural Attaché, have penetrated this market. I hope more Philippine businesses will follow soon,” said Ambassador Cuisia.

The 2014 Market Overview of Natural Foods Merchandiser, a leading media source and information provider for the healthy products industry, showed that US nationwide sales of all natural and organic products jumped 9 percent to nearly $99 billion last year.

According to Philippine Agriculture Attaché to the US Dr. Josyline C. Javelosa, this has also led to a growth in the Natural Products Expo.

“More retail buyers are walking the show floor at Expo East than ever before, looking for the newest quality products to bring back to their stores,” Dr. Javelosa said.

The trade show will reportedly bring over 22,000 attendees and more than 1,800 exhibitors, with approximately 30 percent of those exhibiting for the first time and new to the marketplace, according to Natural Product Expo East.

This year, the expo will include for the first time a Farm-to-Market Tour where attendees will have the opportunity to visit some of Baltimore’s nearby farms and retail stores that source from them. - philSTAR

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Silverpack investing ₱500 Million for Philippine plant

In an interview, a Silverpack official said the company plans to conquer Southeast Asia over the next decade through aggressive expansion of its manufacturing facilities and sales office across the region. image: philSTAR

MANILA, Philippines - Multinational packaging firm Silverpack Sdn Bhd is looking to invest ₱500 million to put up its first manufacturing plant in the country in the next two to three years.

In an interview, a Silverpack official said the company plans to conquer Southeast Asia over the next decade through aggressive expansion of its manufacturing facilities and sales office across the region.

"Our plan is to set up manufacturing plants in Asean in 10 years' time. We already have a factory in Malaysia and China. We have sales offices in Singapore, Sri Lanka and Thailand. We also need to set up sales offices in the entire Southeast Asia," Silverpack regional sales director Jeffrey Ng said.

In the Philippines, Ng said the company intends to gather a sizable market share initially before putting up a manufacturing plant in two to three years.

Ng said Silverpack is currently in talks with large food manufacturing companies in the Philippines for the export of its products.

"We are expanding because companies are also expanding. When they do well, we will do well as well," he said.

Silverpack's clients in Philippines are still mostly small and medium enterprises which import about ₱3 million to ₱4 million worth of products a month.

The company is looking to tap large Filipino conglomerates which invest in their own packaging plants for their businesses.

Ng said a candy manufacturer, for instance, spends 10 percent of its total cost for packaging alone while a high value goods manufacturer spends five to seven percent.

Silverpack's packaging materials are used by a wide range of food industries such as coffee, tea, confectionery, milk products, snacks, biscuits, instant food items, oil, seafood, pet food, sweets, jelly top seal, fruit drinks, personal care series, and moon cakes.

The Embassy of Malaysia Trade Office (Matrade) Manila said Silverpack is among the top five packaging companies in Malaysia at present.

Matrade commissioner Nyaee Ayup said Silverpack's expertise in packaging would help support a wide range of food industries in the Philippines.

"Instead of setting up their own packaging division, the food manufacturers in the Philippines can focus on their main line of business, if they will tap Silverpack for their packaging needs," Ayup said. - With Pia Lee Brago @philSTAR

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Philippines Budget Surplus expanded to ₱67.3 Billion Php in May 2015

PHL budget surplus widens nearly 6 times in May

More Amid the pressing need to boost public spending to pump-prime the economy, government revenues continued to outpace expenditures for the second month this year.

The budget surplus expanded by almost six times to ₱67.3 billion Php in May from ₱11.8 billion Php a year earlier, figures released by the Department of Finance (DOF) on Monday showed. 

The amount widens the ₱52.6 billion Php surplus reported in April, bringing the budget balance to a surplus of ₱86.4 billion Php in the first five months of the year. In comparison, the government registered an ₱8.5- billion Php surplus in January to May last year.

Revenues expanded by 41 percent to ₱242.5 Php billion in May. In January-to-May, revenues were 16 percent higher at ₱922.2 billion Php, according to the DOF.

The Bureau of Internal Revenue raked in ₱128.5 billion Php while the Bureau of Customs and the Bureau of the Treasury collected ₱26.7 billion Php and ₱11.0 billion. Other offices contributed P76.4 billion, reflecting the ₱60.1 billion Php of coconut levy-related remittances.

Government expenditures increased by 9 percent to ₱175.2 billion Php, including ₱20.6 billion Php in interest payments. But the amount represents only about 72 percent of the total revenues generated during the month.

In January to May, expenditures reached ₱835.7 billion Php, a 6 percent increase from a year earlier. Interest payments decreased by 2 percent to ₱136.9 billion Php, accounting for 16 percent of total expenditures.

"Various volatile events in the global landscape serve as stark reminders of the importance of the hard work of reform carefully sustained by prudent fiscal management. We continue to build ample safeguards protecting the country from shocks that pose risks to our upward trajectory," Finance Secretary Cesar Purisima said. 

But economists, credit watchers and banks have cited slow government spending for the worse-than-expected performance of the Philippine economy this year.

Even the National Economic and Development Authority (NEDA) admitted that meeting the lower end of the government's growth target of 7 percent to 8 percent would be difficult given the slowdown in global demand.

The government must focus on intervention in the agriculture and industry sectors to sustain the Philippine economy, former Budget Secretary Benjamin Diokno told GMA News Online.

"To me, ang dapat talagang palalakasin mo, side-by-side, ay agriculture and industry – meaning manufacturing, construction and power.

"Why agriculture? Because a third of the workforce is in agriculture and more than half of the poor is in rural areas," Diokno said.

A modern agriculture sector could translate into cheaper food prices and subsequently benefit the poor, ease the demand for higher wages and make inputs to food manufacturing cheaper, he added. – VS, GMA News

 

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Japan agency upgrades PH's credit rating to BBB+

Japan credit rating agency raises Philippine rating

THE Philippines has received another credit rating upgrade, which is the highest rating the country has ever achieved.

In a report released Monday, Japan Credit Rating Agency Ltd. (JCR) gave the Philippines BBB+ from BBB rating. This was just a notch away from the minimum score in the "A" category.

The latest upgrade from JCR is the 22nd positive rating action (covering both improvement in outlook and actual credit scores) for the Philippines from major international credit rating agencies since 2010, the Investor Relations Office (IRO) of the Bangko Sentral ng Pilipinas said.

This development places the Philippines' credit rating two places ahead of Indonesia's BBB- and at par with that of India, whose economy is seven times the size of that of the Philippines.

"JCR is of the view that the Philippine economy will, by and large, sustain an annual growth of around 6 percent in the years to come driven by strong domestic demand," the rating agency said.

In the report, JCR highlighted the ability of the Philippines to maintain sound fiscal position, high external liquidity, and solid economic growth.

It also cited general stability in the country's political situation even as potential candidates for national positions gear up for the 2016 elections.

JCR also noted the stable social situation amid inroads in poverty reduction, with the poverty rate falling from 28.6 percent in 2009 to 25.8 percent in the first half of 2014.

The new credit rating is assigned a "stable" outlook, which means adjustment is unlikely in the short term.

Government economic officials welcomed the upgrade, which marked the third positive rating action from JCR over the past five years.

"The latest ratings decision of JCR, which makes the Philippines very close to securing a rating within the 'A' category, appropriately reflects the strength exhibited by the economy. Inflation has remained low, external liquidity ample, and banking system sound. All this has been achieved despite a challenging external environment," BSP Governor Amando Tetangco said.

"The upgrade to BBB+ is a recognition partly of how the country’s fiscal sector has transformed since 2010. Fiscal reforms, both legislative and administrative, have resulted in more buoyant revenue collections, manageable deficits, and lower debt service burden. The pace by which the debt burden has declined over the years is one solid proof of the rare kind of fiscal discipline that the Philippines exercises," Finance Secretary Cesar Purisima said.

IRO, which serves as the government's central point of contact for credit-rating agencies, underscored the need for public vigilance to ensure that the Philippines keeps its hard-earned investment grade sovereign credit ratings beyond 2016.

"The Philippines has achieved unprecedented gains in its credit standing over the past five years. After suffering from stubborn speculative credit ratings not too long ago, the Philippines now enjoys a seal of good housekeeping from all major international credit rating agencies," IRO Executive Director Editha Martin said.

"There should be no turning back. The need to maintain good governance – which boosts confidence of investors, creditors, rating institutions, and the general public – even after a change in leadership in 2016 cannot be overemphasized," Martin said.- (SDR/Sunnex)

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China stock loses $3.2 trillion US Dollars in weeks; Suicide rumor -Economy facing trouble

A stock investor looks up in a brokerage house in Shanghai. Chinese authorities have launched frantic efforts to shore up plunging stock prices following another 5.7 per cent decline in the country's main market index on Friday. Source: AP

Chinese chaos worse than Greece: Chinese stock market loses $3.2 trillion, authorities inject cash

WHILE the world worries about Greece, there’s an even bigger problem closer to home: China.

A stock market crash there has seen $3.2 trillion wiped from the value of Chinese shares in just three weeks, triggering an emergency response from the government and warnings of “monstrous” public disorder.

And the effects for Australia could be serious, affecting our key commodity exports and sparking the beginning of a period of recession-like conditions.

“State-owned newspapers have used their strongest language yet, telling people ‘not to lose their minds’ and ‘not to bury themselves in horror and anxiety’. [Our] positive measures will take time to produce results,” writes IG Markets.

“If China does not find support today, the disorder could be monstrous.”

In an extraordinary move, the People’s Bank of China has begun lending money to investors to buy shares in the flailing market. The Wall Street Journal reports this “liquidity assistance” will be provided to the regulator-owned China Securities Finance Corp, which will lend the money to brokerages, which will in turn lend to investors.

The dramatic intervention marks the first time funds from the central bank have been directed anywhere other than the banks, signaling serious concern from authorities about the crisis.

At the same time, Chinese authorities are putting a halt to any new stock listings. The market regulator announced on Friday it would limit initial public offerings — which disrupt the rest of the market — in an attempt to curb plunging share prices.

While the exact amount of assistance hasn’t been revealed, the WSJ reports no upper limit has been set.

All short-selling — the practice of betting that stocks will fall — has been banned, and Chinese media has rushed to reassure citizens.

Yesterday, shares in big state companies soared in response to the but many others sank as jittery small investors tried to cut their losses, Associated Press reports. The market benchmark Shanghai Composite closed up 2.4 percent but still was down 27 percent from its June 12 peak.

Experts fear it could turn into a full-blown crash introducing even more uncertainty into global markets as Europe teeters on the edge of a potential euro zone exit by Greece, after Sunday’s controversial referendum.

WHAT DOES IT MEAN FOR AUSTRALIA?

For Australia, the market crash in China is likely to impact earnings on key exports iron ore and coal, further slashing government revenue, while also putting downward pressure on the Australian dollar.

Jordan Eliseo, chief economist with ABC Bullion, said it was important to remember that the amount of wealth Chinese citizens have tied up in the stock market is relatively minor compared with western investors.

Stocks only make up about 8 per cent of household wealth in China, compared with around 20 per cent in developed nations.

“The market crash there is generating headlines, but it’s not going to have the same impact as a comparable crash would in a developed market,” he said.

“What it means for Australia, though, is it’s very clear there are some serious imbalances in the Chinese economy, and the rate of growth they’ve enjoyed in the past is over. There’s no question our export earnings are going to take another hit.”

Mr Eliseo predicts Australia is likely to experience “recession-like” conditions such as negative wage growth for many years to come. “I believe that’s going to be the new norm,” he said.

CRACKDOWN AS PANIC TRIGGERS ‘SUICIDE’ RUMOURS

Underscoring growing jitters amid the three-week sell-off, police in Beijing detained a man on Sunday for allegedly spreading a rumor online that a person jumped to their death in the city’s financial district due to China’s precarious stock markets.

The 29-year-old man detained was identified by the surname Tian, and is a manager at a technology and science company in Beijing, police said in a post on their official microblog.

Police said Tian’s alleged posting of the rumor took place Friday and called on internet users to obey laws and regulations, not to believe and spread rumors, and to cooperate with police.

The state-run Xinhua news agency reported that Tian allegedly posted the rumors with video clips and screenshots Friday afternoon.

The post, which is said to have gone viral, “provoked emotional responses among stock investors who suffered losses over the past weeks”, Xinhua said.

Xinhua added that a police investigation showed that the video in question had been shot on Friday morning in the eastern Chinese province of Jiangsu where a man had jumped to his death. Local police there were investigating that case, Xinhua said.

The original post was unavailable Sunday on China’s tightly controlled social media, where authorities are quick to delete controversial material. - Jews News /  News.com.au

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Philippine Economy is the Strongest in the World - Findings of Washington USA Think Tank

Philippines has most resilient economy – study

(CNN Philippines) — Should an economic crisis akin to last decade's Great Recession happen again, the Philippines would be the most "resilient" country and be able withstand it, despite its status as an emerging-market economy.

That's the assessment of Center for Global Development (CGD), a think tank based in Washington, D.C.

It's not that hard to imagine another financial crisis happening: Growth in China — the world's second largest economy — has slowed, the United States' bull market hasn't had a correction since 2011, and in the Eurozone, debt-ridden Greece has yet to strike a deal with its creditors.

Economist Liliana Rojas-Suarez of the CGD recently created a "resilience indicator" that measures the vulnerability of an economy to future financial shocks.

Her metric looks into several economic indicators that fall under two categories:

• a country's ability to withstand external shocks 
• government's ability to "rapidly" implement policies that counteract the effects of such shocks 

"I compare the values of the identified variables in 2007 (the preglobal financial crisis year) with the respective values at the end of 2014," she said.

Rojas-Suarez explained: "A country is said to be highly resilient to adverse external shocks if the event does not result in a sharp contractions of economic growth, a severe decline in the rate of growth of real credit and/or the emergence of deep instabilities in the financial sector."

Of the 21 countries she studied, Rojas-Suarez ranked the Philippines as the most resilient economy, ahead of South Korea and China, which fall at second and third, respectively.

Rojas-Suarez found that the Philippines posted a strong improvement in its indebtedness. The debt indicators had substantial influence over the country's ranking.

For example, she points out that the country cut in half its external debt to GDP ratio "from around 40 percent in 2007 to around 20 percent in 2014." This figure stands in stark contrast with most whose ratios are "without significant changes" within that same time period.

She also cites the country's lower government debt to GDP ratio which stood above 40% in 2007, and subsequently shrank to below that figure in 2014.

Likewise, the country also stood out because of its improved inflation performance in 2014 relative to 2007. Rojas-Suarez pointed out that inflation rates have been within the government's targets.

Latin American countries did not do well in the study: "Four of the six Latin American countries in the sample have deteriorated their positions in the ranking. This includes Argentina, which now holds the last position. "

Apart from "bad luck in terms of unfavorable trade," Rojas-Suarez explained that such countries ranked lower because of "the squandering of opportunity to implement needed reforms in the good post-crisis years."

Her study ultimately affirms a long-running cliché: An ounce of prevention is better than a pound of cure.

"Policy decisions taken in the precrisis period played a major role in explaining a country's macroeconomic performance during the global economic crisis (of last decade)," explained Rojas-Suarez.

"[I]nitial conditions at the onset of a severe adverse external shock matter a lot. The good news is that, besides the commodity price shock, the most feared external shock: a sudden rise in interest rates in the US has not (yet) materialized. Time is still on the side of emerging markets’ authorities." - CNN

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Infographic: Philippines among world's fastest-growing economies 2015

MANILA, Philippines — Business news network Bloomberg surveyed top economists around the world who projected 10 economies to have the highest gains in growth in 2015.
While the world is expected to grow by 3.2 percent this year, Asian and African economies will pick up faster than those in other regions.
RELATED: Trade chief: Philippines growth can top 8%

Infographic by Philstar.com / Jonathan Asuncion

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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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