Vol. XXII, No. 21 [ BusinessWorld Online ]
Monday, August 25, 2008 | MANILA, PHILIPPINES
STATE-OWNED Home Guaranty Corp. (HGC) will float P5 billion worth of bonds in the second quarter of next year to enhance its guarantee capacity.
In a talk with reporters last week, Gonzalo Benjamin A. Bongolan, HGC president, said he hopes to secure the necessary approvals from the Finance department and the Bangko Sentral ng Pilipinas (BSP) this year for the issuance of 10-year bonds.
This time, the government-owned and -controlled corporation (GOCC) mandated by law to extend guarantee cover to all bond issuances of other state-run firms will not be issuing zero-coupon bonds or bonds that pay no interest until maturity.
"We used to issue zeroes. It was an admission our cash flows were uncertain. This time, we are certain to offer interest bearing bonds," he said.
Usually sold at a deep discount of its face value, zeroes do not require the issuer to make periodic interest or coupon payments to bondholders. But it pays a large premium to bondholders when the bond matures.
HGC expects its guarantee exposure to grow by between 14% and 16% next year from its P85-billion target this year. — R. A. M. Rubio
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