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2nd Bahay Bonds by yearend

[ ] August 27, 2009


Following the success of the P2.06 billion residential mortgage backed securitization (RMBS) or Bahay Bonds, the National Home Mortgage Finance Corp. yesterday said it plans to issue a second batch by the second half of 2009.

“We still have around the same amount (in residential mortgage loans). We may issue the securities by the end of this year or, if not, early next year,” Joseph Peter Sison, president of NHMFC, said at the sidelines of the Corporate Treasury Summit yesterday. Sison added that later NHMFC may issue RMBS or similar products on a regular basis.

“We now know how it is being done. It was such a huge success that we might forget our other plans and just focus on this instead,” Sison said.

RMBS are securities issued based on cash flows from residential home loans. These can serve as a funding source for the residential mortgage market.

The RMBS supports NHMFC’s vision of being the largest source

of home mortgage funds in the country, primarily for the low-cost and socialized housing sectors.

Sison said that of 105,000 residential mortgage loans, around 30,000 are considered low delinquent.

These are the best quality loans in NHMFC’s portfolio and are stringently selected on the basis of strong payment history.

“Of the moderately delinquent, some have been upgraded to low delinquent accounts. So the figure may still go higher,” Sison noted.

Sison said NHMFC is in talks with various banks who might be interested in selling foreclosed housing assets.

Sison stressed that they are careful not to enter into the sub-prime mortgage market, the collapse of which in the United States started the current global economic slowdown.

The March issuance of P2.2 billion RMBS fulfills the long-term objective of the government to jumpstart and lay down the foundation for a vibrant secondary mortgage market, , long mandated to attract private institutional funds into long-term housing mortgages, Sison said.

Bahay Bonds, which are tax exempt, consist of two classes of notes, the senior notes and the sub-notes.

The senior notes, rated AA by Philratings, are offered to institutional investors while the sub notes, rated BBB+ by Philratings, will be retained by NHMFC.

In assigning the rating, Philratings took into account the relatively small and affordable loan monthly amortization amounts.

Philratings said the loans for inclusion in the asset pool are highly seasoned with low loan to value ratio and low default rates. Loans for inclusion in the asset pool have passed selection criteria for credit quality and are considered prime accounts of NHMFC.

The senior notes have the first priority over the collections from the loans while sub notes have the lowest ranking priority.


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