Nelson Buenaflor, president and chief executive officer of Quedancor said that of the P2-billion loan, only P1 billion will actually be channeled to the coffers of the agency while the other P1 billion will be used to buy zero coupon bonds.
He explained that gains or interests from the purchase of the P1-billion zero coupon bonds, will double during the locked up period of seven years which Quedancor will use to pay for the principal loan of P1 billion.
"This deal will be to Quedancor’s advantage because we don’t need to worry about how to pay the principal loan. On the other hand, amortization of the interests will be coming from the repayment by the agency’s own loan beneficiaries," Buenaflor said.
Quedancor has been acquiring loans from other commercial banks as part of its efforts to build its capital base to P10 billion this year. This should give it the elbow room it needs to expand its lending operations to farmer/fisherfolks and farm-related enterprises.
Aside from the P2-billion loan, Quedancor is also negotiating an additional P500-million credit window, also with Equitable Bank and a P1.2-billion rediscounting facility with the Land Bank of the Philippines (Landbank).
Quedancor was already assured earlier by the Landbank of a new P400-million direct lending facility which the latter will use to buy promissory notes from the state-run credit farm.
The amount is over and above the P800-million rediscounting facility which Landbank is making available to Quedancor yearly, enabling the DA credit firm to lend up to P50,000 per small borrower at an interest rate not higher than 14 percent per annum.
Buenaflor added that Philippine Veterans Bank will also open a P300-million credit line while the United Coconut Planters Bank is expected to retain its P500-million credit window with the firm. These will be used to buy promissory notes and receivables from Quedancor borrowers, he said.
For this year, Quedancor is targeting to lend at least P5 billion in low-interest bearing loans to targeted beneficiaries, a hefty 72-percent increase from the P2.9 billion it released in 2003.