PHILIPPINES CONFIRMS PREPAYMENTS ON NEW DEBT PACT
Finance Secretary Jaime Ongpin has
confirmed the Philippines agreed to make token prepayments of
principal to foreign banks as part of a 10.3 billion dlr debt
restructuring package.
    A Reuters report from New York yesterday quoted bankers as
saying Manila will pay 111 mln dlrs over 1987, 1988 and 1989.
    But Ogpin denied Manila was playing down the prepayment
aspect of the restructuring.
    "They are public documents and there is nothing secret about
it," he told Reuters.
    The debt accord, announced last Friday, stretched
repayments of 10.3 billion dlrs over a 17-year period with a
seven and a half year grace period and an interest rate margin
of 7/8 percentage points over Eurodollar rates.
    Ongpin said the prepayments were part of "seven different
scenarios" Philippine negotiators prepared before the talks.
    "It was one of the many options we offered the banks in
order to win an attractive pricing," he said.
    The prepayments were on a 925 mln dlr nine-year loan signed
in 1985, which carried a four-year grace period. Principal
repayments were not due until 1990.
    Ongpin said the prepayments would hardly affect the
Philippines' balance of payments position.
    "There is no problem in financing it -- the prepayments
constitute about 1.5 pct of current international reserves of
2.5 billion dlrs," he said.
    "We do plan to cover the costs by selling Philippine
Investment Notes (PINs) worth about 150 mln dlrs a year."
    PINs are negotiable, foreign-currency denominated
instruments that will be offered to creditor banks and are
designed for conversion into pesos to fund government-approved
equity investments within the Philippines.
    Ongpin said Manila would have to repay about 200 mln dlrs a
year when amortisations on the 925 mln dlr loan came up.
    He said the 12-bank advisory committee sent telexes of the
accord to the country's 483 creditor banks and he expected
documentation and agreement from all of them by July.
    Foreign bankers here said the pact gave Manila the largest
interest rate cut among major debtor nations.
    They said Mexico's new debt package last October marked a
1/16 point drop from its 1985 debt agreement, while Manila's
new pact slashed its 1985 agreement by up to 3/4 percentage
points.
    Venezuela's new margin last month was only a 1/4 point drop
from the rate agreed in a rescheduling accord in 1986, the
bankers said.
    "Add to this the fact that Manila has frozen principal
repayents since 1983, while Venezuela has amortised six billion
dlrs in foreign debt since 1984 and will have paid back more
than eight billion dlrs by the end of this year," one added.
    Ongpin said Manila's 7/8 margin meant the Philippines would
pay about 100 mln dlrs a year in interest when its grace period
ended.
 REUTER
