MANILA - The Philippines is studying the possibility of issuing as much as $1.5 billion in Samurai bonds this year to cover a budget deficit expected to reach a record high in 2009, the Malacanang palace said on Wednesday.

Separately, Leah de Leon, a Finance undersecretary, told Reuters the government was considering a Samurai bond offer of up to $1 billion this year. The final decision on the size of the offer would depend on market conditions and the debt costs for the government, she said.

The Japan Bank for International Cooperation will provide a guarantee for the Philippines' Samurai bond issue.