Pag-IBIG to come up with P12 billion bond offering
Posted on September 23rd, 2009
The government-controlled home development mutual fund Pag-IBIG Fund will also be coming out with its own bond offering within the next two months. The Pag-IBIG board has approved a P12-billion bond offering and it is now with the Department of Finance.
The Development Bank of the Philippines (DBP) and First Metro Investment Corp. (FMIC) has been mandated by the Pag-IBIG to arrange the offering. FMIC executive vice president Roberto Juanchito Dispo said, the offering may not be necessarily be done in a single tranche.
The bonds were intended to help raise funds for fresh lending by the agency, given the boom in demand for low-coast housing, and at the same time, to refinance maturing debts as well. Pag-IBIG caters to the affordable housing market which are not served by traditional banks. It offers retail loans with average size of P475,000, most of which are coming from the C-income bracket.
The Pag-IBIG are planning to have some add-ons on the bond offering to make it more attractive especially to banks. The agency plans to seek approval from the Bangko Sentral ng Pilipinas (BSP) to make the proposed bonds eligible for compliance with banks’ mandatory lending under the agri-agra and socialized housing, Dispo said.
The government requires the bank to set aside a fourth of their lending portfolio for agricultural or agrarian reform-related projects. Unfortunately, many banks fail or do not comply with this requirement, the primary reason of which is the lack of viable projects.
Some of the proceeds of the bond offering would be used to settle maturing obligations and debt management. By 2010, Pag-IBIG has P5 billion debt maturing.
DBP and FMIC are working to incorporate a debt-swap feature on the bond-offer. The debt swap component may account for P7 billion while the balance of P5 billion would represent new funds that Pag-IBIG can use to expand its lending program.
