ADB mission to firm up guarantee for bond offer

The Asian Development Bank (ADB) will send a mission to the Philippines in June this year to firm up a commitment to provide partial guarantee to the planned $750-million bond offering of the Power Sector Assets and Liabilities Management (PSALM).

PSALM president Edgardo Del Fonso said the ADB and PSALM have signed a memorandum of understanding (MOU) for the extension of such guarantee. But he said this will be firmed up by the ADB mission that will come to Manila middle of the year.

He said this is just in time for the planned flotation in the third quarter or sometime September 2002.

According to Del Fonso, there are a number of issues that were raised by some ADB officials during a meeting last Friday. "These issues will probably be resolved when the mission comes here this June," he said, but declined to elaborate further.

The $750-million bond float is half of the $1.5 billion financing requirement for the National Power Corp. (Napocor). The first $750 million was already piggy-backed by Napocor with the National Government.

Under the new power law, PSALM will absorb all the assets and liabilities of Napocor, and manage all the financial matters of state-owned power firm.

Del Fonso said the ADB did not have problems on extending partial guarantee to the $750 million borrowing of Napocor but they would still have to determine how much of the total bond float would be guaranteed by the multilateral creditor.

He also said that they are still sticking to the $1.5 billion financing requirement for Napocor this year contrary to reports that they would raise it by another $150 million to P1.65 billion.

"We have no plans yet to increase that figure. We have not discussed that yet," Del Fonso said.

PSALM has decided to work out possible ways of raising money for Napocor’s operations this year since it admitted that there would be some delays in the privatization of the country’s largest power generation firm’s assets.