NDC had sold P5 billion worth of bonds in 1999 under the P50 billion Economic Recovery through Agricultural Productivity or ERAP bonds. The bonds are scheduled to mature in April 2004.
"The government wants to refinance the NDC bonds to avail of the lower prevailing interest rates," Roxas said.
He said securing a government guarantee will make the NDC bonds more attractive to investors especially since the NDC’s financial position is deemed "quite shaky."
The proceeds of the original NDC bonds were earmarked for long-gestating agricultural projects.
According to Roxas, because the investment is supposed to be in the form of equity, rather than short-term loans, the bonds’ five-year maturity period does not match the long-term financing requirements of agricultural projects.
The planned financing scheme is expected to stretch the maturity of the NDC bonds, while making it cheaper for the NDC to borrow funds.
NDC has the authority to issue all of the P50 billion ERAP bonds, but it only offered the initial P5 billion due to low investor demand. – Marianne Go