MANILA, Philippines - State-administered Home Development Mutual Fund (HDMF), also known as Pag-IBIG Fund, successfully sold P11.963 billion in five-year bonds in an auction yesterday, proceeds of which would be used to refinance existing debts and finance existing programs.
Total tenders reached P30.898 billion or more than three times oversubscribed, reflecting ample liquidity in the market.
The bonds fetched a coupon rate of five percent. If the agency went for a full award of the programmed P12 billion, the paper would have fetched a coupon rate of 5.125 percent, still lower than the rate of a comparable five-year paper issued in January of 6.233 percent.
The HDMF auction committee, however, opted to make a partial award of P11.963 billion to get a discounted coupon rate of five percent.
HDMF chief executive officer Jaime Fabiaña said proceeds of the bonds would be used to refinance P7 billion in debt maturing in May while the rest would be used to finance the agency’s programs.
Fabiaña said that for 2010, the government has programmed to extend P50.5 billion worth of housing loans which range from P400,000 to P3 million. This amount, estimated to finance roughly 80,000 houses, is higher than the 2009 program of P45 billion which covered 75,000 houses. In 2008, the agency extended P34 billion in housing loans which covered 62,000 houses.
Pleased with the outcome of yesterday’s auction, Fabiaña attributed the strong investor reception to the sweeteners offered by the agency to investors.
The bonds serve as alternative compliance by banks with the Agri-Agra Law and counts as reserve assets of insurance companies and compliance with the Urban Housing Development Act.
It was also guaranteed by Home Guaranty Corp., currently headed by Gonzalo Bongolan.
The lead arrangers of the agency for the bonds are state-owned Development Bank of the Philippines, Land Bank of the Philippines and First Metro Investment Corp., the investment-banking arm of the Metrobank Group.
Pag-IBIG is the state-owned agency that provides affordable home financing to members. It also provides personal and other emergency loans.
During yesterday’s auction, National Treasurer Roberto Tan chaired the committee. Vice-President Noli de Castro, concurrent chairman of the Housing and Urban Development Council and HDMF’s Fabiaña also presided over the auction.