MANILA, Philippines — The Department of Finance (DoF) said that the planned borrowing for state-run Power Sector Assets and Liabilities Management Corporation (PSALM) may be in tranches to fund its maturing obligations this year.

Finance Undersecretary Rosalia B. de Leon said in a phone interview that the first tranche of the proposed P85 billion borrowing for PSALM may happen within the first three-months of the year depending on how fast they get necessary approvals.

De Leon explained that the government needs to borrow in tranches as some of the P70 billion to P80 billion PSALM bonds will mature in the second semester of the year.

She, however, declined to provide the initial borrowing amount.

De Leon also confirmed that the PSALM may sell dollar-denominated bonds in the domestic market.

National Treasurer Roberto B. Tan earlier said the government was exploring the possibility of selling the bonds in the local market to help the PSALM in its liability management program.

Tan pointed the government needs to raise dollars, which will be the first time in two years, as some of PSALM's maturing obligations are in dollar domination.

But all in all, Tan said the borrowing program of PSALM would remain at P85 billion – a combination of peso- and dollar-denominated bonds.

De Leon said the P85 billion is separate from the government’s own financing requirement of P727.4 billion to fund its programmed budget deficit of roughly P286 billion.

The borrowings of PSALM are not paid by the government but are passed on to consumers as part of a universal charge.

PSALM has obtained P75 billion in syndicated term loan early last year to meet working capital requirements and refinance debt that fell due earlier.

The agency said it was also exploring options for its future financing requirements, including tapping the capital markets to raise funds. As of end-2009, total liabilities of PSALM stood at $16.5 billion.

Finance Secretary Cesar V. Purisima earlier said that consolidating the liability management of the various state-owned companies would enable the government to better handle its debts.

This is because the government would be able to borrow at a lower cost which in turn would improve the country’s fiscal health.

When state-owned companies borrow, they seek sovereign guarantee for their borrowings to able to make it easier for them to convince investors to lend them money.

State-owned companies also shoulder a certain amount of premium when issuing new debt.