PSALM mulls $500-M US bond float

The Power Sector Assets and Liabilities Management Corp. (PSALM) is planning to float some $500-million worth of US bonds early next year, Energy Secretary Vincent S. Perez said yesterday.

In a press conference, Perez said there are at least three investment banks that have offered to underwrite the 10-year US-denominated bonds after the successful Eurobond float of the National Government last week.

Perez declined to identify the investment banks that have submitted proposals for the bond float. The Eurobond offering, the first international bond float of the Arroyo administration, was syndicated by Deutsche Bank, Salomon Smith Barneys and UBS Warburg.

The Department of Finance (DOF) had successfully undertaken a $450-million Eurobond offering last week. The bond float received an enthusiastic response from investors and was oversubscribed, with offers reaching as much as $800 million.

Because of the success of the first offering, the three quasi-banking firms have indicated a firm commitment to handle another bond float. "They have proposed to syndicate as much as $300 million each. But we will consider only $500 million," Perez said.

Proceeds from the bond offering, Perez said, would be used to partly finance the capital and operating expenses of the state-owned National Power Corp. (Napocor).

Perez is the chairman of Napocor and a board member of PSALM, an entity created under Republic Act 9136 or the Electric Power Industry Reform Act (EIRA) that would absorb the assets and liabilities of the state-run power firm.

He said if PSALM decides to push through with the bond float, it would carry a government guarantee. "We already had discussions with (Finance) Secretary Jose Isidro Camacho regarding this (bond float)," he said.

But he said they would still have to determine if the timing is right. "We need not rush. We need to study it carefully," he said.

Perez admitted that PSALM would need some $1 billion for the financing requirement of Napocor. The financing need of Napocor, however, will depend on how much the government will raise from the privatization of the power firm’s assets, particularly the transmission assets.

Initial estimates show that the Napocor will be able to sell the Transco assets at $2.4 to $2.7 billion.