By Eileen A. Mencias

Globe Telecom Inc., the telecom unit of Ayala Corp., plans to issue P3 billion to P5 billion in five-year notes this month, banking sources said.

Sources said Globe Telecom had already offered the notes to potential buyers last week. Bank of the Philippine Islands, another Ayala-controlled company, is arranging the notes.

Globe Telecom, the country?s second-largest mobile phone service provider with 24.7 million subscribers, has earmarked $350 million to $400 million this year for capital expenditure.

It has $247 million in maturing obligations this year.

The company reported a 43-percent drop in net financing costs to P3 billion from P5.225 billion in 2007.

Ratings agencies have warned of a tightening credit market for companies on expectations of higher default.

FitchRatings as early as 2007 warned that Philippine telecommunication operators might have limited flexibilities in tapping loans even as it kept its outlook on the industry stable.

Fitch noted that both PLDT and Globe had successfully managed to balance both shareholder and creditor expectations and strengthened their credit profiles, but warned of rising business risks.

The ratings agency said the two are expected to maintain their market positions.

FitchRatings said it ?does not anticipate any near-term changes to the existing industry structure, in view of the benign regulatory regime, persistent interconnection-related issues and limited capacity of smaller operators to sustain competition against the entrenched players.?