Finance Secretary Jaime Ongpin saidPhilippine Investment Notes (PINs), to be offered to commercial
bank creditors as part of the country's 13.2 billion dlr debt
rescheduling, would revive the Baker Plan.
    PINs are tradable, foreign currency-denominated financial
instruments with a six-year maturity, designed for conversion
into pesos to fund government-approved equity investments
within the Philippines.
    Ongpin told reporters after a meeting with businessmen the
government was planning to issue between 100 and 150 mln dlrs
worth of PINs at a discount of about 12.5 pct this year.
    The plan, outlined by U.S. Treasury Secretary James Baker
18 months ago, stalled because commercial banks balked at the
idea of lending additional money, Ongpin said. It had called
for substantial new commercial bank lending and development
bank aid in order to help debtor countries grow out of their
economic troubles.
    The PINs provide a mechanism to finance the growth needed
by these debtor nations, provided they are willing to welcome
foreign equity investment into their economies, Ongpin told a
businessmen's meeting. "And this can now be achieved without
forcing commercial banks into involuntary new money lending."
    Bankers in New York said given the booming market in
debt-equity swaps, PINs ought to work if Manila issues the
notes at an appropriate discount.
    Ongpin said the use of PINs would result in anticipated
savings of one billion pesos over the debt agreement's 17-year
life.
    The accord restructured 5.8 billion dlrs of previously
rescheduled debt, 3.5 billion dlrs of debt falling due between
January 1987 and December 1992, and 925 mln dlrs of new money
lent by the banks in 1985 at a spread of 7/8 percentage points
over London Interbank Offered Rates (LIBOR).
    It also rolled over trade credits worth 2.9 billion dlrs.
    Ongpin said the Philippines' 7-1/2 year grace period was
better than Mexico's seven-year grace period, while the PINs
proposal would result in savings of foreign exchange and
generate pesos which would be reinvested in domestic
enterprises.
    Ongpin said the restructuring of commercial bank debt, as
well as of 870 mln dlrs of debt by the Paris Club of Western
creditor governments in January, was expected to reduce the
country's debt-service ratio to between 25 and 30 pct from its
current level of 40 to 45 pct.
    He said the country's balance of payments was now projected
at a surplus of about 1.2 billion dlrs in 1987, compared with a
surplus of about 1.1 billion dlrs in 1986 and a previous
projected deficit of 1.2 billion dlrs this year.
    The Philippine negotiating team refined the PINs idea three
times before the final agreement was struck last Friday, Ongpin
said. "What we have now is PINs IV," he said.
    Ongpin told the meeting he had kept his promise to gain
terms better than those granted last year to Mexico, which won
a 20-year repayment at 13/16 points over LIBOR.
    "And they (Mexico) are a long way from seeing any money
cross the table even as of today," Ongpin said, adding he
expected much quicker approval from all the Philippines' 483
creditor banks worldwide.
    He said he had been in almost daily telephone contact with
President Corazon Aquino, particularly when the banks began to
take a very tough stance on pricing.
    "But the President's instructions were unequivocal and
unwavering, 'Do not yield one more millimetre and I don't care
how long it takes. Get a green card if you have to, but don't
come home without a deal we can all be proud of'," he said.
 REUTER
