BY DENNIS GADIL
[ Malaya.com.ph ] June 4, 2010
Home Guaranty Corp. (HGC) is rushing the packaging of a proposed P5.5 billion in bonds in the hope that President Arroyo could approve it before she steps down on June 30.
If Arroyo does not take "midnight" action, the ball will land in the court of the incoming administration, Finance Undersecretary Jeremias Paul Jr. said.
Proceeds from the P5.5 billion borrowing are intended to re-finance HGC’s debts and to pay matured guarantees.
Paul denied that the finance department has shelved the proposed borrowing.
HGC has been seeking the green light for its bond float since last year.
Without the much-need bond proceeds, the home insurer may fall short of its mandate to provide guarantee cover to socialized and low-cost housing loans extended by Pag-IBIG and Social Security System.
The finance department has long approved in principal the float of P5.5 billion worth of seven-year debt papers, or more than double HGC’s capitalization.
The float is part of HGC’s borrowing program pegged at P8 billion.
Paul earlier said the finance department has yet to determine whether HGC indeed needs the money or it just wants to take advantage of low interest rates.
HGC intends to allocate P2.5 billion of the proceeds to debt refinancing and the P3 billion to unpaid guarantees to the SSS.
HGC’s current obligations stand at P5.5 billion to P6 billion.
By end 2009, the HGC had a total guarantee portfolio of P68 billion.
The HGC failed to float housing bonds late last year after state regulators ran out of time in approving the float. The home insurer revived its plan this year, hoping to make the float in the first quarter.
The HGC last sold seven-year bonds in 2006 worth P12 billion.