PSALM taps three underwriters for P30-billion bond offer

MANILA, Philippines - State-run Power Sector Assets and Liabilities Management Corp. (PSALM) has tapped Hongkong and Shanghai Banking Corp. (HSBC), First Metro Investment Corp. (FMIC), and the Development Bank of the Philippines (DBP) to underwrite its P30-billion bond offer.

The amount raised will be used for the working capital requirements and debt payments of the National Power Corp. (Napocor). PSALM is the government agency mandated to sell Napocor’s power assets and oversee the repayment of the state power firm’s huge debts.

Napocor has P73-billion worth of maturing loans this year.

According to FMIC executive vice president Juanchito Roberto Dispo, the domestic bond offer will likely be launched in late March, with tenors of 5.5 and 7.5 years. FMIC is the investment subsidiary of banking giant Metropolitan Bank & Trust Co. (Metrobank).

The P30-billion PSALM paper will be the biggest corporate bond offer in the domestic market this year, and the second largest so far on record.

In the first quarter of 2009, San Miguel Brewery Inc.’s P38.8-billion bond sale become the country’s largest and was hailed by international investment magazines as the “Best Deal of 2009” in both the domestic and Asian markets.

As of December 2009, PSALM has sold or contracted to sell 29 of Napocor’s generation assets with a total operating capacity of 3,072.2 megawatts (MW), representing approximately 81.3 percent of the utility’s generation assets in Luzon and the Visayas.

PSALM said the ample liquidity and low interest rates prevailing in the domestic market encouraged it launch a sizeable bond offer.

The agency made its first foray in the international bond market in May last year through an issue of $1-billion global bonds due in 2019. In November, PSALM tapped the international market again with a $1.2-billion bond exchange offer of Napocor bonds maturing in 2010 and in 2011.

The regional and local bond market has been very active so far, with deals amounting to P140 billion. Issuers are rushing to the debt market to raise capital ahead of the May 10 general elections.

Corporate debt sales alone reached a record high of over P260 billion, with all issues warmly received by a highly liquid market.