Favila nixes add’l NDC bonds to finance PIC

Trade and Industry Secretary Peter B. Favila is against a proposal to float additional NDC bonds to raise funds for the projects of the Philippine Infrastructure Corp. (PIC).

Favila’s opposition stems from his desire not to impose additional debts on the National Government due to the need to provide a sovereign guarantee to the NDC bonds as a sweetener.

According to Favila, he has informed NDC General Manager Arthur Aguilar that he would be amenable to the float as long as there is no sovereign guarantee attached to the bonds.

A sovereign guarantee would mean that the National Government would assume the debt if NDC is unable to repay the bond buyers upon maturity.

Instead of floating additional NDC bonds, Favila is eyeing a possible share of the mandatory allocation by banks for agri-agra loans.

Favila said that banks would likely be amenable to allocating a portion of their funds for vital infrastructure projects out of their existing allocation for agri-agra loans.

At present, Favila pointed out, there are actually very few viable agriculture or agrarian loans and most banks instead invest their funds in government securities as alternative compliance to the mandatory agri-agra loan allocation.

Funding for the PIC is supposed to come from the flotation of some P3 billion NDC bonds.

The PIC is supposed to jumpstart vital infrastructure projects while government tries to attract investors to eventually takeover the projects.