PSALM mulls $500-M bond float

The Power Sector Assets and Liabilities Management Corp. (PSALM) is looking at the possibility of floating some $500-million worth of bonds in the third quarter to cover part of the remaining $750-million financing requirement of the National Power Corp. (Napocor) this year.

Energy Secretary and PSALM director Vincent S. Perez told reporters Wednesday said they are in the process of selecting the underwriters. "At this point, we have received a number of proposals from various financial institutions," Perez said.

He said so far, Lehman Brothers and UBS Warburg have expressed interest to handle the bond flotation.

The energy chief said they would complete the selection of the underwriters next month. "We hope to finish it by June this year," he said.

PSALM still needs to raise some $750-millions, representing half of the $1.5-billion financing requirement of Napocor for 2002, to finance payments of maturing debts and operating expenses.

The other $750 million was already raised by Napocor in the first quarter of this year when it piggybacked with the National Government’s bond float.

Perez, however, did not say whether the borrowing would be done by PSALM or through the National Government again.

He is confident, though, that the government will financially assist the state firm. "The thinking there is we will most likely allow the Republic of the Philippines to cover the financing requirement and support Napocor. Our financing requirement will go hand in hand with whatever the Philippines’ financing exercise would be undertaken.

Napocor has some $800-milllion worth of maturing loans this year. The amount was secured by the power firm in the early 90s and was used to bankroll its power generation and transmission projects. On top of the $1.5-billion financing requirement, the Napocor has to rise another $100 million to cover for the two-month suspension of the purchased power cost adjustment (PPCA) as ordered by President Arroyo early this month. — Donnabelle Gatdula