Pag-ibig floats P2B 5-yr housing bonds

The Home Development Mutual Fund (HMDF) or Pag-ibig has floated a P2 billion five-year and one-day housing bonds, designed to encourage individuals to save more and consider long-term investment channels.

According to Pag-ibig Fund marketing assistant Ariel Acosta, the issuance of the bonds is intended to generate additional funds to finance Pag-ibig Fund's housing programs for its members and the government.

Acosta said the activity is also aimed at alleviating the lifestyle of individuals embracing into effective saving options, via long term investments.

This state-run institution has set the first offering period of the bonds starting January 29 to February 5 exclusive for retail investors while offering period of institutions follows from February 6 to 12.

He said Pag-ibig still has to talk with the Bangko Sentral Ng Pilipinas (BSP) Monetary Board to set the fixed yearly interest rate, which will be paid twice a year.

Investors will have several denomination choices, which include; P10,000 denomination, P100,000, P500,000, P1 million and P10 million.

He said the indicative rate would not be lower than 5.875 percent.

In 2001, Pag-ibig introduced its first housing bonds offer, which interest rate reached eight percent.

Interest and yield earned by the bonds are exempted from the ordinary income tax and the 20 percent final withholding tax.

Acosta said with maturity date of five years and one day, the issue date of the bonds would start on February 14.

With stronger marketing drive for the bonds this year compared to the bonds first issued in 2001, Acosta is confident to attract more buyers for this year's housing bonds.

Pag-IBIG is targeting members and non-members, foreign nationals, corporations, developers and insurance companies as potential investors.

He said they expect the bonds to be sold out two weeks after its release in the market since as the housing agency has been getting reservations for the bonds early this month.

After the initial offering dates, investors can buy the bonds at the secondary market through the Development Bank of the Philippines (DBP) or the Land Bank of the Philippines (LBP) at prevailing market rates.

The Home Guaranty Corp. (HGC) will act as guarantor to the bonds, providing cash guaranty to Pag-IBIG Fund bondholders up to the full amount of principal and interest. The HGC seal carries with it the unconditional guarantee of the Republic of the Philippines .

The bonds would be available at any Pag-IBIG Fund office nationwide and at DBP and LBP selected branches. An application form should be accomplished in the banks to purchase the bonds. Investors are also required to open and maintain a deposit account either with either DBP or LBP to facilitate crediting of the interests and the principal amount upon maturity of the bonds.

Pag-ibig marketing team led by Acosta was here in Cebu recently to hold the Pag-ibig Housing Bond 2007 Series. They expect more Cebuanos to invest in this long term, yet high yield investment.