P30-B ‘patriotic’ bond mulled for Marawi rehab

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AN EXPLOSION is seen on June 27 after a Philippine army aircraft released a bomb during an air strike as government troops continue their assault against insurgents from the Maute group in Marawi City. -- REUTERS

By Elijah Joseph C. Tubayan

A P30-BILLION “patriotic bond” is being mulled by the Department of Finance (DoF) for the rehabilitation of Marawi City, which has been ravaged by the still ongoing gun battle between government forces and the Islamic State-inspired Maute terror group.

In a statement, Finance Secretary Carlos G. Dominguez III ordered the Treasury bureau to study the possibility of floating debt papers worth P30 billion that will be earmarked for the repair of public and private infrastructure in the city.

“These are what you would call ‘patriotic’ bonds to help augment the funds that the government has set aside for Marawi’s rehabilitation,” Mr. Dominguez said at an executive committee meeting last Monday.

Mr. Dominguez said they are looking at a 20-year tenor for the bond issuance.

However, a bond trader sought for comment said that a longer tenor may be unattractive for the market, especially when the rehabilitation could stretch beyond 2022.

“If it (tenor) is longer, it’s kind of unlikely that there will be demand,” she said in a phone interview.

The trader said that the Treasury bureau should instead look at a five- or seven-year bond maturity.

“If Marawi could stretch beyond 2022. It should be a minimum of five years, that’s what investors are looking at. Investor’s demand is shorter, usually on three years to eight years,” said the trader.

“If they will consider the RTB (retail Treasury bond) type, that would be well participated, as they also like the quarterly interest. So with that in mind, they should look at a five-year, or seven-year paper if they want participation,” she added.

Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo, meanwhile, told reporters yesterday that there is still enough market liquidity for the patriotic bond offer, which is deemed enough to cover the rehabilitation plan.

“It’s enough to cover for the amount of the Marawi rehab. If there is an opportunity for the banks, all they need to do is withdraw the money from us and buy government securities,” he said.

The Department of Budget and Management (DBM) said earlier that the government will release at least P15 billion to rehabilitate Marawi in the next two years.

The government fund will be on top of the Chinese government’s donation of P15 million and the Japanese government’s $2 million.

The Maute group launched its rampage in Marawi, considered as the most important Islamic city in the country, on May 23, which prompted President Rodrigo R. Duterte to impose martial law in the entire southern islands of Mindanao. The martial law period, as approved by Congress, will be in effect until the end of 2017.

Meanwhile, 29 government officials and members of the Armed Forces of the Philippines (AFP) are now implementing intensified security measures to contain a possible “spillover of the conflict in the City of Marawi” to other parts of Lanao del Sur province.

Lt. Gen. Carlito G. Galvez, Jr., commander of the Western Mindanao Command (WesMinCom) that covers the area, said the Maute fighters, who continue to hold ground in pockets of the city, are already running out of ammunition and food.

As such, the AFP has tapped local government officials to help the military and the police in ensuring that reinforcements are not brought in and at the same time ensure that the remaining fighters do not escape.

“We are nearing the end of this prolonged battle with the penetration of our troops into the main battle area, but we beseech your consideration and assistance,” Mr. Galvez told the local leaders.

“We believe that the top leaders are still in the battle area, but we do not discount the possibility of reinforcement and retreat. This is where the key involvement of local government units comes in,” he added.

At the Senate, lawmakers adopted on Wednesday the resolution proposed by Senate President Senator Aquilino L. Pimentel III to create a special committee focusing on the rehabilitation of Marawi.

It will study, review, assess, examine, investigate and inquire into the matters relating to the reconstruction of the besieged city.

According to Mr. Pimentel, it is the senate’s contribution to the President’s call for “full support, assistance, and cooperation for Task Force Bangon Marawi,” the interagency body created to oversee the rebuilding program.

“The extent of the damage sustained by Marawi City and the large number of displaced citizens caused by the rebellion requires a well-coordinated large-scale rebuilding effort on the part of the government,” Mr. Pimentel said. — with Jil Danielle M. Caro and Mario M. Banzon