Vol. XXII, No. 163 [ BusinessWorld Online ]
Friday, March 20, 2009 | MANILA, PHILIPPINES
INVESTORS’ response to the P2.2- billion residential mortgage-backed bond offering of state-run National Home Mortgage Finance Corp. (NHMFC) has been overwhelming, with tenders reaching twice the amount of the offer, the local unit of UK-based Standard Chartered Bank (StanChart) said.
StanChart, the arranger and underwriter of the sale, in a statement said investors from the public and private sectors see the bond issue as an alternative investment vehicle.
The mortgage-backed securities, the first of such kind to be issued in the country since the Securitization Act of 2004 was enacted, are debts that use cash flows from residential home loans as payment guarantee.
The five-year bonds dubbed Bahay Bonds are backed by 12,000 housing loans from the NHMFC’s Unified Home Lending Program portfolio. These loans, originating between 1985 and 1996, where chosen through a stringent set of criteria to ensure these have strong payment history.
The issue is divided into senior notes and sub notes, the former rated by local debt watcher Philipine Rating Services Corp. as AA or low risk and of high quality. The the latter obtained a rating of BBB+.
The senior notes totaling P1.98 billion are being offered to institutional investors while the sub notes will be retained by the NHMFC for liquidity purposes.
StanChart said the book has been closed and the bonds will be priced on Monday.
The NHMFC originally set the closing of the bond offer last month but reset it due to a spike in interest rates after large private corporations turned to the domestic capital market to raise funds.
Proceeds from the debt issue will be used to pay the debts the state housing agency owes the Social Security System and Pag-IBIG Fund.
NHMFC has an outstanding loan amounting to P25 billion that it used to finance residential home loans. — G. S. dela Peña
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