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SHFC plans bond sale in Q1 2013, eyes P2B

Posted on August 19, 2012 08:56:54 PM [ BusinessWorld Online ]

THE SOCIAL Housing Finance Corp. (SHFC), which undertakes housing programs for the poor, is eyeing P2 billion from the sale of residential mortgage-backed securities in the first quarter of next year.

“NHMFC will securitize SHFC’s housing loan receivables worth around P2 billion to raise more funds for SHFC’s socialized housing programs,” said National Home Mortgage Finance Corp. President Felixberto U. Bustos, Jr. in an interview last Friday.

“Given that SHFC is an attached agency of NHFMC and they have no expertise in arranging a bond issuance, NHMFC will work with them in arranging the debt sale.”

NHMFC was created under Presidential Decree No. 1267 to develop and provide a secondary market for home mortgages granted by public and/or private home financing institutions.

It raised P604 million from the sale of residential mortgage backed securities called “Bahay Bonds 2” on Aug. 8.

SHFC, its wholly-owned subsidiary, was created under Executive Order No. 272, and is mandated to offer social housing programs catering to the formal and informal sectors belonging to the low-income bracket.

“The developers that will purchase the bonds can use their subscription to comply with the government’s socialized housing rule,” Mr. Bustos said.

Under Republic Act No. 7279, or the Urban Development and Housing Act of 1992, real estate developers are required to devote at least 20% of subdivision developments for socialized housing.

Mr. Bustos said SHFC was supposed to raise the P2 billion this quarter but decided not to push through with the issuance because it was still liquid.

He added that SHFC is planning on issuing five-year or retail papers next year, “but it would still depend on the recommendation of our chosen underwriter.”

Mr. Bustos said retail investors are targeted for the debt sale because the coupon rate might not be attractive to institutional investors.

“The securities will likely a carry low interest rate to match the yield carried by the home loans offered to SHFC borrowers. These might not attract the institutional investors,” he said.

NHMFC listed P300 million worth of Class A Bahay Bonds, which carried a tax-exempt 4.8% interest rate, on the fixed-income bourse last Friday.

It raised P120 million from the sale of the Class B notes, which were offered to institutional investors and bought P180 million worth of Class C notes. -- Ann Rozainne R. Gregorio  
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