Napocor to issue P5-B fixed rate bonds next month

The debt-ridden National Power Corp. (Napocor) will issue P5-billion worth of five- to seven-year fixed rate bonds next month, the company’s second peso bond offering after the zero-coupon bonds issued in 2004.

Deutsche Bank, First Metro Investment Corp., and the Land Bank of the Philippines (LBP) were appointed joint issue managers for the bond float.

The issue managers said proceeds from the bonds will be utilized for general funding requirements, including debt servicing. The issue could be increased to a maximum of P7 billion in the event of an oversubscription.

Interest will be payable quarterly in arrears, with principal to be paid in full upon maturity within five or seven years from issue date. Target auction date is on May 5 this year while target issue date is on May 11.

Coupon rate will be determined through a Dutch auction to be conducted by the inter-agency auction committee through the automated debt auction processing system of the Bureau of Treasury (BTr), the facility agent.

The bonds will be issued in scripless form and will be registered through the BTr’s Registry of Scripless Securities (RoSS).

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has approved the power bonds "as eligible security for the faithful performance of trust duties when the remaining maturity of the bonds reaches three years."

Likewise, the Insurance Commission (IC) approved the Napocor power bonds as admitted reserve assets of insurance companies. Insurance companies are heavy investors of ROP bonds, which are used to increase its long term reserves for claims.

Last week, First Metro Investment and the Development Bank of the Philippines (DBP) were named co-issue managers for the Home Development Mutual Fund or Pag-IBIG’s P5-billion housing bonds.

Proceeds from the Pag-IBIG Housing Bonds will be used to finance and strengthen the housing programs.

The peso-denominated fixed-rate bond issue may likewise be increased to a maximum of P7 billion, in case of over-subscription. Interest will be payable semi-annually, with principal to be paid in full upon maturity, which is five years and one day from the issue date.