By Iris C. Gonzales (The Philippine Star) Updated December 07, 2009 12:00 AM
MANILA, Philippines - State-administered Home Development Mutual Fund (HDMF), also known as Pag-IBIG Fund, is seeking the approval of the Department of Finance (DOF) for its plan to issue P9 billion to P12 billion worth of bonds.
Pag-IBIG Fund sought the approval over the weekend through a letter addressed to Finance Undersecretary Jeremias Paul Jr.
In its letter, the Fund said it would use the proceeds of the bond issuance to pay off its maturing obligations.
Pag-IBIG offers retail loans amounting to an average of roughly P500,000, mostly those within the C-income bracket.
Officials said the proposed bonds will have a tenor of five or seven years.
Members and nonmembers of Pag-IBIG, foreign investors, corporations, developers and insurance companies may invest in the proposed bonds.
A member of the Pag-IBIG board said that once the Department of Finance (DOF) approves the issuance, Pag-IBIG may proceed with the transaction this year as it wants to take advantage of the cash-rich local market.
Strong liquidity in the financial system has enabled a lot of corporate borrowers such as Globe and SM Investments Corp. to raise bonds this year. Even the government sold retail treasury bonds in September.
Pag-IBIG has tapped state-owned Development Bank of the Philippines and First Metro Investment Corp., the investment-banking arm of the Metrobank Group as arrangers for the deal.
Pag-IBIG may raise the bonds through a private placement instead of doing it through an auction at the Bureau of the Treasury. Offering the bond through a private placement similar to the way corporate bond issuers do it is the more simplified route.
For this year, the agency has allocated P84.5 billion for lending to members and housing developers. The amount is 20 percent higher than last year’s total allocation of P71 billion.
Of the programmed amount for lending, up to P43 billion are available to members while P7.5 billion are allocated for housing developers. Members can also tap the agency’s “multipurpose loans” for which the fund has a budget of P34 billion.
As of end-March, the fund’s housing-loan portfolio was as big as P156 billion, or about two-thirds of its total assets of P233 billion.
____________________________________________________________________________________
