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Business

Government plans P10-B bond float for MRT-LRT interconnection

- Ma. Elisa Osorio  -
The government will float more than P10-billion worth of bonds to finance two major infrastructure projects, Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) Director General Romulo L. Neri said.

He said this fund-raising activity will bankroll the MRT-LRT interconnection in North Edsa and the ship leasing project.

According to Neri, investors are getting "very impatient" with the MRT-LRT project. "I said to finance it immediately. NDC (National Development Co.) can float P10 billion in bonds (for this project),".

Neri said NDC was supposed to float P20 billion worth of bonds last year but only managed to release half of it. "We have a P10-billion slack," he noted.

He said the float should be done soon. "Interest rates might go up," he said. However, he pointed out that project construction will not begin immediately and would likely start after the May national elections. "We will have to arrange the financing. It takes time," he said. 

On the maritime leasing project, Neri said they will try to borrow money from the Development Bank of the Philippines (DBP) first. 

"We will try first the DBP and then we will find out how much money is needed," he said.

Earlier, DBP obtained a P16-billion loan from the Japan Bank for International Cooperation (JBIC) for the development of the local maritime industry. However, Neri said DBP has been slow in releasing the fund. "DBP being a bank requires real estate collateral," he explained.

"We are doing the leasing route. The beauty of leasing is that anytime the lessee skips one or two months’ payment, the lessor can always get back the ship, no more court case or anything because the ship is yours, you are just renting it out," he said.

"The ship operators like it because in that way you get long term financing for their ships without having to put up real estate collateral," he added. 

"The first tranche will come from DBP, the unused portion of the P16 billion. They only lent out I think half of that. Then we could float another bond from NDC to finance if there is greater demand.Then the final tranche, the big one will come from JBIC," Neri said.

He stressed the importance of developing the maritime industry as there is already P6-billion worth of leasing just waiting for the market to open. "In other words there is a big market for it."  

"The Philippines should be a maritime power," he said. "I think this will be our next boom area," he added.  

vuukle comment

BILLION

DBP

DEVELOPMENT BANK OF THE PHILIPPINES

DIRECTOR GENERAL ROMULO L

INTERNATIONAL COOPERATION

JAPAN BANK

NATIONAL DEVELOPMENT CO

NERI

NORTH EDSA

SOCIOECONOMIC PLANNING SECRETARY AND NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY

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