MANILA, Philippines - The Philippines may raise up to $1 billion from a planned Samurai bond issue if it gets favorable pricing and good demand, a senior government official said on Wednesday.

"If we can raise $1 billion through Samurai, we will do that," Finance Undersecretary Rosalia de Leon told reporters.

The government wants to sell Samurai bonds early 2010 to help fund its budget gap, which analysts expect to reach nearly P300 billion.

National Treasurer Roberto Tan said the Philippine government and the Japan Bank for International Cooperation (JBIC) have already reached a general agreement on the guarantee cost for the Samurai bonds, bringing them closer to executing a deal.

The guarantee cost has been a point of contention between the parties ever since they signed a memorandum of understanding last June for JBIC to guarantee 95% of the present value of all principal and interest payments.

With a guarantee from the Japanese's financing arm, the Japanese government can afford to price the yen-denominated bonds, worth between $500 million and $1 billion, at a cost cheaper to the Philippines. With a report from Reuters