Napocor to float $500-M bonds

The National Power Corporation (Napocor) will undertake a $500-million bond flotation this year, the proceeds of which will be used to settle maturing obligations.

The planned bond flotation was confirmed last weekend by Finance Secretary Jose Isidro Camacho.

Napocor to Details at the bond flotation however, have yet to be finalized.

In the overseas financial and debt markets, particularly in the Asian bond market, Philippine issues were the focus last week, on hopes market sentiment will improve for emerging markets especially as Napocor, and telecommunications giant Philippine Long Distance Telephone Co. (PLDT) were reported to be soliciting underwriters for their respective bond issues.

PLDT is expected to issue $300 million worth of bonds this year.

Bangko Sentral ng Pilipinas (BPS) Governor Rafael Buenaventura said that since the central bank will have to approve the bond issuances, it might be appropriate for both Napocor and PLDT to issue medium-term or five-year maturing bonds.

"There is a window for longer-termed maturities in the emerging markets. The sentiment right now is that the spreads are favorable," Buenaventura said.

The BSP chief suggested the five-year maturities for Napocor and PLDT to ensure that there will be no "bunching up" of the borrowings or that loans will not carry the same maturities that could put pressure on the peso.

Aside from Napocor and PLDT, the National Government has opted to raise funds through private placements that should cover most of its foreign funding requirements for the year. Some $500-million in private placements were arranged for the Philippine government by Credit Suisse and JP Morgan Chase. Earlier this year, the BSP acquired a $740-million loan from a syndicate of 19 local and foreign banks.

Napocor, which will be privatized eventually with the passage of the Omnibus Power Bill, is saddled with debts of more than P900 billion resulting from the shrinking infusion of the National Government, as well as expensive power purchase contracts with independent power producers incurred to stop the power crisis in the early 1990s.

The state-owned power firm is hard-pressed in raising funds for its expenditures as it gets just a pittance from the National Government. This year alone, Napocor’s capital expenditures requirement is about P22 billion. It has also to retire about $144-million maturing loans in September. – Rocel Felix