PHILIPPINES SAID TO RAISE INTEREST OFFER TO BANKS
Prospects of an agreement on
rescheduling about 9.4 billion dlrs of Philippine foreign debt
have increased following the offer of a higher interest rate by
Manila officials, foreign banking sources said.
    The sources said Finance Secretary Jaime Ongpin made the
proposal to a 12-bank advisory committee, chaired by
Manufacturers Hanover Trust Co as the talks entered their
fourth week in New York.
    They said the Philippines was now willing to pay a spread
of 7/8 percentage points over London Interbank Offered Rates
(Libor), up from the 5/8 points it originally proposed.
    The sources said the proposal was made in a bid to break a
deadlock with the banks, who were insisting on a minimum
interest spread of one full percentage point over Libor.
    They noted that the latest plan marked a compromise between
the two sides' demands, but fell short of Ongpin's assertion
that the Philippines would insist on a deal better than the
13/16 percentage points offered to Mexico last year by its
creditor banks.
    The sources added that two key members of the negotiating
team returned to Manila last night, indicating agreement was
likely to be hammered out by this weekend.
    The sources said Finance Undersecretary Ernest Leung and
Deputy Central Bank Governor Edgardo Zialcita left New York
after Ongpin and Central Bank Governor Jose Fernandez started
talks with the banks to put finishing touches to the accord.
    "The talks are now in a make-or-break phase," the sources
said. "All that is left are the wrinkles -- unless some bank
again decides to hang tough."
    They were referring to the last round of negotiations in
November 1986, when one bank, identified as Citibank NA,
refused to endorse the committee's proposal of 1-1/8 points
over Libor.
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