HGC seeks P2.2-B equity infusion

Home Guaranty Corp. (HGC) is seeking equity infusion from the National Government (NG) of P2.2 billion to beef up its capitalization and strengthen its operations for the next two years.

According to data from the government, HGC is asking for an equity infusion of P1.2 billion for 2009 and P1 billion for 2010.

HGC president Gonzalo Bongolan said the equity infusion would be used to support the agency’s operations.

“It’s for general purposes. We would be able to expand our guarantee capacity,” he said.

Home Guaranty is a government-owned and controlled corporation mandated by law to extend guarantee cover to all bond issuances of other state-run firms.

“The equity infusion would also be used for refinancing purposes,” Bongolan said.

He expressed hopes the government would approve the equity infusion which is allowed under the charter of HGC.

HGC said that under its charter, it is allowed to have an authorized capitalization of P50 billion.

At present, the HGC’s paid-up capital is only P11 billion.           

Bongolan said if the National Government can provide equity infusion of roughly P1 billion a year, this would be reasonable enough.

A ranking Finance department official said the equity infusion for HGC could be granted given that its authorization capitalization is still below P50 billion.

Bongolan said HGC’s request for equity infusion from the National Government still has to be deliberated upon at the Senate.

He said that if the agency receives the greenlight for the equity infusion it may not have to borrow P5 billion in 2009.

Earlier, Bongolan said the agency is eyeing to issue at least P5 billion worth of bonds next year as part of efforts to strengthen its operations, its top official said during the weekend.