Vol. XXII, No. 147 [ BusinessWorld Online ]
Thursday, February 26, 2009 | MANILA, PHILIPPINES
STATE firm National Home Mortgage Finance Corp. (NHMFC) has postponed the closing of its P2.2- billion bond offer to next month, as it buys time until aggressive corporate borrowing — partly blamed by analysts for the spike in interest rates — fizzles out.
The housing agency was due to end the book-building for its maiden offer of residential mortgage-backed securities yesterday, but the schedule has been moved to the third week of March instead, said Joseph Peter S. Sison, NHMFC president.
Top Philippine companies have run to the domestic capital market for funding needs, taking advantage of investor demand for high-yielding instruments. But with these corporate borrowers offering generous premiums to comparative Philippine Treasury bonds, pricing the NHMFC bonds has become tricky, Mr. Sison pointed out.
The mortgage-backed securities, which carry a five-year tenor, will likely be priced at 125 basis points to two percentage points off the rate of benchmark five-year bonds, he said. That compares with the market estimate of 9-9.5% for San Miguel Brewery’s five-year debt, which is at least three percentage points higher than the comparative Philippine T-bonds.
San Miguel Brewery, the flagship of food-and-drinks group San Miguel Corp., has announced it will sell up to P38.8 billion worth of peso-denominated bonds.
"The market rates were a bit distorted. San Miguel will be selling bonds with quite higher rates so we had to go back to our board and come up with new rates so as to be competitive," Mr. Sison told BusinessWorld.
"So we moved the scheduled closing to the third week of March."
The NHMFC bonds were rated "Aa," or high quality and low risk, by local debt watcher Philippine Rating Services Corp. citing the unlikelihood of default. The debt issue is being arranged by Standard Chartered Bank.
The P2.2-billion bond offer includes P1.86 billion worth of bonds that will be sold to the public while the rest will be kept by NHMFC for liquidity purposes.
The mortgage-backed securities, which Mr. Sison noted was the first of such kind in the country since the Securitization Act of 2004 was enacted, are debts that use cash flows from residential home loans as payment guarantee.
Proceeds from the debt issue will be used to pay the debts the state housing agency owes the Social Security System (SSS) and Pag-IBIG.
NHMFC has an outstanding loan amounting to P25 billion, Mr. Sison said. The home mortgage firm borrows funds from fellow government firms SSS, Pag-IBIG as well as the Government Service Insurance System to finance residential home loans. — Maria Eloisa I. Calderon