PSALM concludes new loan prepayment deal

MANILA, Philippines - The state-run Power Sector Assets and Liabilities Management Corp. (PSALM) recently concluded another loan prepayment as it continues to earnestly pursue its liability management program.

PSALM prepaid the Export Credit Facility obtained by the National Power Corp. (Napocor) in 2003 from Erste Bank der Oesterreicheischen Sparkassen AG (EBOS), one of the largest bank groups in Austria.

Created under the Electric Power Industry Reform Act (EPIRA), PSALM handles the finances of Napocor as well as the privatization of the power generation’s assets and contracts.

The loan was extended by EBOS to finance Napocor’s procurement of equipment and supplies for the rehabilitation of the Agus hydroelectric power plant six years ago.

PSALM prepaid the outstanding amount of 3.5 million euros or $5.15 million, with applicable interest, of the credit facility as it took advantage of current low interest rates in the market.

According to PSALM, the present value savings on the prepayment is at $180,400, which includes savings in interest and guarantee fee.

Proceeds from the privatization of Napocor’s assets were used for the prepayment.

The successful prepayment became possible through the support provided by the Bangko Sentral ng Pilipinas and the Department of Finance, which ensured the smooth processing of the payments.

Aside from savings on interest payments and guarantee fees, the prepayment reduced Napocor’s foreign currency debt by 0.0081 percent and subsequently increased the peso component of the debt currency mix.

The settlement was made a day before PSALM successfully bid out the management of the contracted capacities of the San Roque, Bakun and Benguet hydroelectric power plants on Dec. 15, to end 2009 on a positive note.

PSALM was also recently honored in the 2009 Triple A Awards of the prestigious Asset Magazine for its effective and diligent implementation of its power privatization and liability management programs.

So far, PSALM has successfully conducted five loan prepayments, with the first four being made in March, June, August and September 2008.

From over $7-billion total loans, Napocor reduced its debts to $6.8 billion as of end-2008.