Bangko Sentral ng Pilipinas approves $1-billion global bonds issue of PSALM

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has approved the $1-billion global bonds issue of the Power Sector Assets and Liabilities Management Corp. (PSALM) that the company planned to use to finance its liability management program.

The BSP said the plan was approved in principle by the Monetary Board (MB) before the Holy Week break, allowing PSALM to finalize the terms of the global bond issue.

BSP officer in charge and Deputy Governor Armando L. Suratos told reporters over the weekend that the PSALM issue would be made in one or several tranches.

According to Suratos, PSALM intended to use the proceeds to bankroll its “expanding requirements and the implementation of the liability management program.”

Suratos said the issue would have a maturity of five to 15 years.

PSALM is the government agency in charge of privatizing state power assets and the global bond issue would also be used as working capital and to pay some of its maturing debt.

About $1 billion of Napocor’s $6.2 billion in debt was scheduled to mature this year, and another $1.7 billion was scheduled to mature in 2010. The power company would also need funds to operate power plants and pay private companies that sell its electricity.

PSALM canceled presentations to potential investors earlier this month, citing poor market conditions.

It was reported earlier that PSALM was also in talks with banks to hedge Napocor’s monthly dollar requirements of between $50 million and $100 million.

This, however, would not be the first time the government would offer global bonds on behalf of Napocor using PSALM as the issuing entity. The last time that a similar undertaking was completed, however, was in 2002—shortly after PSALM was created.