Posted on 08:45 PM, March 09, 2010 [ BusinessWorld Online ]
THE HOME Development Mutual Fund, tasked to make housing affordable to private sector and government workers, raised P11.936 billion from the sale of five-year bonds yesterday.
The Pag-IBIG Fund, as it is popularly known, will use the money to settle debts and to add to funds available for housing loans.
The papers fetched a coupon rate of 5% at the auction, 12.33 basis points lower than the 6.233% average rate five-year papers got at a Treasury auction last Jan. 19.
Demand for the bonds was high with total tenders reaching P30.898 billion against a P12-billion offer.
Had Pag-IBIG awarded the bonds in full, the papers would have fetched a coupon rate of 5.125%.
“The proceeds will be used [to pay] P7 billion worth of debt maturing in May and the rest will be for our housing loans,” Pag-IBIG Fund Chief Executive Officer Jaime A. Fabiana told reporters after the auction.
He said demand was high due to the credibility of Pag-IBIG as a borrower.
For his part, National Treasurer Roberto B. Tan said the demand for the paper showed there was high market liquidity.
“The auction was very successful. There was so much liquidity,” he noted, while pointing out the bonds’ attractive features.
Bond yields will be exempt from taxes.
The bonds may also serve as banks’ alternative compliance to Presidential Decree No. 717 or the Agri-Agra Law. Under the law, banks are required to allocate 25% of their lending resources to the agriculture sector. The bonds may also serve as reserve assets of insurance companies.
The Pag-IBIG bonds may likewise be considered as compliance by developers to the Urban Development Housing Act of 1992, which requires them to provide socialized housing.
First Metro Investment Corp. (FMIC) and state-run Development Bank of the Philippines were the issue managers. FMIC, the investment banking arm of the Metrobank Group, also served as one of the lead underwriters with another state bank, Land Bank of the Philippines.
The bond sale was initially scheduled last year but was postponed to just before May.
Pag-IBIG issued P45.7 billion in housing loans last year, 34% more than in 2008. A total of P50.5 billion is available for housing loans this year.
“This year, we are expecting 80,000 units [of houses] for loans ranging from P300,000 to P1 million,” Mr. Fabiana said. -- Louella D. Desiderio