The Department of Finance (DoF) and the Bangko Sentral ng Pilipinas (BSP) are reviewing the Philippines’ $24.73 billion sovereign bonds or sovereign bonds, of which $15.43 billion worth of both short-term and long-term bonds have been identified for debt swaps in the next few weeks.

Last Friday, the BSP’s Monetary Board granted the DoF an approval-in-principle to transact a bond exchange of up to $6 billion in September.

According to a review by the BSP’s International Operations Department, maturing ROPs were “quite high” or $1.85 billion and up. The BSP has advised the DoF not to issue bonds maturing in 2019, 2020, 2025, 2030, 2031 and 2034. They consider these maturities as having the highest indicative pricing and rates.

The proposed bond exchange has a new money component of $500 million 10-year bonds, which would also replace long-term bonds expiring in 2035. DoF Secretary Cesar V. Purisima told the BSP that the transaction was an "opportunistic" exercise.

The DoF has classified bonds for exchange as totaling $6.786 billion worth of short-term bonds, and $8.647 long-term bonds, for a total of $15.43 billion. The bonds for swapping represent 62.4 percent of the total outstanding ROP bonds to-date of $24.73 billion 2011 to 2034 ROPs. The plan was to exchange up to $4 billion long-term bonds and up to $2 billion short-term bonds.

The short-term bonds have maturities between 2011 and 2016, including the $1.6-billion ROP 8.250 percent due January, 2014, the $1.484 billion ROP 8.375 percent due February, 2011, the $1.3 billion ROP 8.00 percent due January 2016, and the $948-milion ROP 9.00 percent due February, 2013.

The long-term bonds considered as candidates for bond exchange, in the meantime, include the $2 billion ROP 9.50 percent due February, 2030, the $1.854 billion ROP 10.625 percent due March, 2025, the $1.85 billion ROP 6.375 percent due October, 2034 and the $1.5 billion ROP 6.375 percent due January, 2032.

The debt swap, according to the DoF, would clean up the country’s ROP dollar yield curve and create efficient benchmark bonds. It would also extend the duration of its external debt securities portfolio and generate interest savings for the government.