Sovereign bonds marketing to begin

DEPUTY Prime Minister and Treasurer Charles Abel, announced that Credit Suisse and CitiBank will start the process of marketing sovereign bonds.
Abel said the announcement was the culmination of several years of preparation and he was pleased to lead the Treasury Department, Bank of PNG and the State Solicitors’ Office to undergo the process following final clearance by Cabinet last week.
“One of the initiatives of the PNG Government, through our 25-point plan, is to begin a process of debt restructuring to reduce short-term domestic debts with longer term, cheaper concessional foreign debt,” Abel said from Singapore.
“This approach will reduce rollover risk, reduce interest costs and support foreign exchange reserves.
“The 2018 Budget has a projected manageable deficit of K1.97 billion. K640 million of this is to be generated from the proposed sovereign bond issue.
“Importantly, the majority of our foreign debt will remain in highly concessional bilateral and multilateral loans.
“We are paying down existing debt and funding the budget with these proceeds. At all times we will ensure we remain below the 35 per cent debt to GDP range, as is stipulated by PNG’s Fiscal Responsibility Act.
“I have announced that we have mandated Credit Suisse and CitiBank to arrange a series of meetings with fixed income investors in Singapore, Hong Kong, London and the United States, which will begin today in Singapore.
“Thereafter we will consider, subject to a number of our own conditions, a five-year and up t o a 10-year, US dollar denominated senior bond offering.
“We are clear that there can be no assurances that any bonds will be issued, and a decision with respect to any issuance will be made only after we are comfortable with the offering.”
The deputy prime minister highlighted that announcing the engagement of the banks and undertaking investor meetings was the beginning of the process.
“Our engagement is in line with established processes, and there is no guarantee that an issuance would occur post the investor meetings unless this is in the interests of both the Nation and engaged investors.
“Over the coming week, the
State and its advisors will consider offers from the investment community and then make
decisions in accordance
with the Government’s budget strategy.”