PSALM completes prepayment of Napocor debt

The Power Sector Assets and Liabilities Management Corp. (PSALM) has completed another prepayment of the National Power Corp.’s yen-denominated loan worth ¥27.2 billion or around $263 million.

PSALM acting vice president for finance Lourdes Alzona said the amount represents Tranche B of the Miyazawa loans extended in 1999 by the Japanese government to Napocor to finance a number of transmission projects.

“The prepayment will reduce Napocor’s debt obligation and will improve its debt to GDP (gross domestic product) ratio from 31.39 percent in 2003 to 10.94 percent in 2007,” Alzona said.

Napocor’s debt to total GOCC (government-owned and controlled corporation) debt ratio also dropped from 80.58 percent in 2003 to 57.15 percent in 2007, she added.

Ferdinand A. Florendo, manager of PSALM’s Capital Markets and Risk Management Department, said aside from savings on interest payments and guarantee fees, “the Miyazawa prepayment reduces Napocor’s foreign exchange debt by four percent and increases the peso component of the debt currency mix to 13 percent from 11 percent.”

He said this improves Napocor’s liability profile by reducing the exposure of the company to foreign currency fluctuations.

Last March 20, PSALM prepaid ¥17.4 billion worth of loans from the Direct Japan Bank of International Cooperation-Overseas Economic Cooperation Fund.

With the prepayment of the Miyazawa loans, Napocor’s total debt has been reduced by 5.6 percent. PSALM aims to reduce Napocor’s debt by at least 28 percent in the next two years.

The prepayment of the yen-denominated loans was made possible by the successful bidding of Napocor’s generation plants.

Pursuant to the Electric Power Industry Reform Act, proceeds from the privatization of the government’s electricity assets are being channeled to liquidate the financial obligations of Napocor.