ME: So, just as he had to bash Barack Obama for not entertaining GMA's calls of congratulations when Obama won the elections last November, not that that has anything to do with the analyst's recent effort, Amando Doronila---the Philippine Daily Inquirer news analyst---now bashes Cesar Purisima, which you can read in our own old copies of the paper there on our papers and rags stand. But, our mike regular PitPat has some thumbs-up signs to raise for the Cesar's not-so-solid salad of moves, disputing Doronila's all-out critique. But first, here's that Doronila column, then the mike's on to Saint Pete in his defense of La Purisima.
Bond float report cheap propaganda - INQUIRER.net, Philippine News for Filipinos
PITPAT: (at first the mike feedbacks, but pretty soon it's sounding sure as a Shure) It's pretty weak. Yes, for sure the verdict is still out on PNoy’s admin creating lasting economic recovery efforts that would prop the country’s baseline to a sustainable level (i.e. increasing its target ratio for “investment” grade opportunities), but to insinuate that the bond float was executed to assuage the negativity from the hostage crisis is far too much of a stretch. The operational life-cycle in the international fixed-income market requires a strict adherence to a very lengthy and tedious process, so they would have to have begun this likely just after PNoy’s inauguration (i.e. way before the hostage situation). Secondly, the brilliance of countering our below-investment-grade rating (currently, I think we’re at -BB) for USD-bond offerings (which surely would have pegged at around the high 7% yield rate) with the tactical work to float bonds in peso denomination in the “global” arena (yes, it’s not a global bond, it’s a peso bond, but sold in the open global market---Purisima did not articulate that correctly) at a huge discount of 5% yield, is truly commendable. On the yield spread alone, Roberto Tan and Cesar Purisima effectively saved the country a whopping US$20+ million in debt servicing. The more critical part is that the bond float effectively pushed the peso to be a larger player in the currency exchange market because buyers would need the peso to buy the bond.
However, this is a very tricky dance. We don’t want our peso to rise too much (which this does) because our export industry would be pummeled, but by the same token it also makes our current debt servicing cheaper (since we will use a stronger peso to buy weaker dollars so we can pay-off outstanding debt, effectively saving the country a load of money in the process again). In short, Mr. Doronila is stretching this way too thinly and politicizing something that was purely an economic play, and a good play at that even considering all the positive and negative implications. This one was a good show. So, yes---the international market gobbled it up for a reason. Thirteen times oversubscribed is no joke, that’s a huge vote of confidence for the country.
