MANILA, Philippines - The National Development Co. (NDC), the investment arm of the Department of Trade and Industry sold P3.5 billion worth of five-year bonds yesterday, proceeds of which would be used to fund various irrigation projects around the country.
The bonds fetched a coupon rate of 5.125 percent as investors tendered a total of P7.350 billion, more than double the P3.5 billion targeted amount.
“We got more than twice... It’s more than well-received,” NDC general manager Ma. Lourdes Rebueno told reporters after the auction at the Bureau of the Treasury.
The coupon rate fetched by the issuance was within the five percent to 5.5 percent yield expected by the NDC, Rebueno said.
The latest issuance represents the fourth tranche of P50 billion worth of bonds which NDC has been mandated to sell since 1998, mainly for various irrigation projects nationwide.
Of the P50 billion, NDC has so far raised P12.5 billion which includes the P3.5 billion raised during yesterday’s bond sale. It sold P5 billion in 1999, P2 billion in 2002 and P2 billion in 2006.
Rebueno attributed the large subscription and relatively low coupon rate to NDC bonds’ eligibilities. Apart from generating tax-exempt interest income, the NDC bonds also qualify as an alternative compliance by banks to the Agri-Agra Law. This law requires banks to invest 25 percent of their loan portfolio to agricultural ventures. These sweeteners are on top of the full and unconditional guaranty extended by the National Government.
Of the P3.5 billion raised yesterday, NDC would use P1.5 billion to finance new irrigation projects while the balance would be used to refinance maturing obligations particularly the P2 billion issued in 2002.
Rebueno said there is still no schedule yet when the next bond sale would be.
The National Irrigation Authority (NIA) will use the proceeds of the bond sale for its nationwide irrigation program.
The program’s repair and rehabilitation of irrigation systems component would restore productivity of some 33,000 hectares of rice lands. Its repair and upgrade component would service another 20,000 hectares while the restoration and rehabilitation of additional irrigation facilities components would cover 21,600 and 50,000 hectares, respectively.