NFA to push through with P27-billion bond issue this year

MANILA, Philippines - The National Food Authority (NFA), the debt-laden grains agency, will push through with its plan to issue bonds this year to take advantage of strong investor appetite, a Department of Finance official said during the weekend.

“They’re already preparing for the issuance,” said Finance Undersecretary Jeremias Paul Jr.

The state-owned grains agency plans to sell P27 billion worth of 10-year bonds this year to refinance maturing debts and to fund its operations.

Paul said the issuance would likely attract investors since the NFA is already implementing reforms to help improve its financial viability.

Details of the planned issuance are still being finalized but Paul said the bonds would be sold to the domestic market.

Proceeds of the sale will be used to pay off NFA’s debts, part of which were incurred because of the purchase and sale of subsidized rice that target the poorest sectors. The NFA’s outstanding debts totaled P108 billion as of last year, more than double the P53 billion it incurred in 2007. 

NFA and several other government-owned and controlled corporations want to take advantage of the high level of liquidity in the local bond market by selling debt papers this year.

Aside from NFA, the Home Mutual Development Fund or Pag-IBIG Fund is also selling roughly P12 billion in bonds to pay off maturing debts in 2010, Paul said.

Quedan Rural Credit and Guarantee Corp. (Quedancor) may also push through with its plan to float bonds this year.

Quedancor, which has an outstanding debt of around P2.4 billion, is mandated to come up with credit support programs for farmers, rural workers, cooperatives and processors of agricultural and aquatic commodities. It was placed in hot water last year after it was accused of diverting P2.46 billion worth of swine program funds to the campaign of administration candidates during the 2004 polls.

Investors in the local bond market have been looking for attractive facilities to park their funds. Just last month, the government successfully sold P114 billion worth of retail Treasury bonds.