Vol. XXI, No. 232[ BusinessWorld Online ]
Thursday, June 26, 2008 | MANILA, PHILIPPINES
STATE-RUN National Home Mortgage Finance Corp. (NHMFC) is deferring the issuance of P2.5 billion worth of mortgage-backed securities to next month or August, as it is still studying whether there is a demand for these financial instruments.
The government agency originally scheduled the issuance this month.
In an interview, NHMFC President Joseph Peter S. Sison said Standard Chartered Bank (StanChart), which has been chosen as underwriter, is also studying the financial climate amid risks of higher interest rates.
"The bank will advise us on the market condition, if there is demand for this instrument, aside from the rates and existing market rates so we can be competitive," he added.
Securitization — creating a financial instrument by combining other financial assets and then marketing these to investors — will allow the NHMFC to generate funds for housing finance from the capital market.
NHMFC was created in 1977 to provide a secondary market for home mortgages.
"As interest rates are going up, we have to determine our other costs so we have sufficient profit margin," Mr. Sison said.
NHMFC has P6-billion worth of low delinquency accounts — the P2.5-billion worth represents the first tranche to be securitized — but Mr. Sison said the agency has not yet decided on the suceeding issuances.
While he is confident banks will buy the mortgage-backed securities, Mr. Sison said NHMFC’s main concerns is "popularizing" the instrument.
"We want more investors to be familiar with the product," he said.
As the government could not provide for housing alone, Mr. Sison said the capital market is the best source of funds for housing. — Ruby Anne M. Rubio
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