MANILA, Philippines - The National Food Authority (NFA) raised P9 billion from the sale of 10-year bonds in a public auction yesterday, proceeds of which would be used to fund its refinancing requirements and operations this year and in 2010.
The 10-year notes has a call option on the fifth year, which means that investors may redeem their money including interest in 2014. The bonds fetched a coupon rate of 6.375 percent, lower than the secondary market rate of the government’s five-year Treasury bond of 6.428 percent.
The NFA may sell an additional P1. 5 billion worth of the debt paper through the Bureau of the Treasury’s tap facility because of the attractive rates fetched by the bonds, said Celia Tan, NFA assistant administrator for finance and administration. The facility allows eligible dealers to electronically bid for additional offerings of securities after a successful auction.
“The rates are very good because the market is really liquid,” Tan told reporters after the auction.
The P9 billion would be used mostly to refinance NFA’s maturing obligations, she said.
To date, NFA has total oustanding debt of P115 billion comprising of short to medium-term liabilities.
Of the P115-billion outstanding debt, at least P16.5 billion are maturing in the next three years, Tan said.
To date, NFA needs P35 billion for refinancing and liability management. Of the amount, the agency has already raised P8 billion in February 2008.
With the P9 billion raised yesterday, NFA still needs to raise P18 billion to complete the P35 billion.
Tan said the agency may still do another auction before the yearend or enter into bilateral loan agreements with local banks. “We have a lot of options,” Tan said.
The state-owned agency is looking at various ways to raise funds to plug its losses incurred because of its mandate to sell rice at prices cheaper than prevailing market rates.
NFA expects to incur losses of P30 billion this year, same as last year, Tan said.