The program was launched yesterday as Pag-IBIG signed the facility agency agreement with the Development Bank of the Philippines and the guaranty agreement with DBP and Home Guaranty Corp. (HGC).
Pag-IBIG president and chief executive officer Manuel Crisostomo said the agency was issuing the bonds to generate additional funds to finance its housing program.
"However, owing to the fiduciary nature of our funds, we are committed to balance our investments in housing with our other mandate to maintain the viability and profitability of the provident fund entrusted to us by our members," Crisostomo said.
On top of issuing bonds, the government would still tap alternative sources of housing finance to ensure the viability and sustainability of the entire housing program.
Crisostomo said the main target of the bond issue are Pag-IBIG members and non-members, developers, insurance companies, retirement funds or any government or private companies.
"We are also targeting employers who may utilize the bonds as bonus or giveaways to their employees, students and parents who may want to use the bonds as funds for future needs," he said.
To be issued in denominations of P5,000, P10,000, P50,000, P100,000 and P1 million, the bonds would have fixed yearly interest of eight percent payable twice a year or semi-annually. The interest income will also be tax exempt by virtue of the HGC guaranty with a maturity date at five years from date of issue.
According to Pag-IBIG Fund executive vice president Romero Federico Quimpo, the initial issue would amount to P2 billion but would be expanded up to P8 billion over a three-year period.
Quimpo said the succeeding issue would amount to P3 billion every year in 2002 and 2003, beefing up Pag-IBIG’s funds to sustain its housing development programs.
Under the agreement signed by Pag-IBIG and DBP, the latter has agreed to be the registrar, servicer and trustee bank for the bonds while the guaranty agreement authorized HGC to provide cash guaranty to Pag-IBIG bondholders up to the full amount of the principal and interest.
The bonds would be considered as allowable investments of institutional investors such as insurance companies and they could also serve as collateral for developers loan from Pag-IBIG and as surety deposit for Pag-IBIG collecting agents.