PSALM to buy dollars to pay Napocor debts

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has given the Power Sector Assets and Liabilities Management Corp. (PSALM) the green light to purchase foreign exchange, particularly dollars, to settle the maturing loans of National Power Corp. (Napocor).

A source said Napocor owes debt worth more than $400 million and the loans are scheduled to mature in the next few months.

“PSALM wanted to buy foreign exchange and dollars from a commercial bank to pay debts maturing this March and July,” the source added.

Earlier, PSALM announced that it would borrow at least P20 billion in the first quarter of the year to take advantage of domestic liquidity and the low interest rate environment in reducing the financial obligations of Napocor.

It plans to issue 5.5-year and 7.5-year bonds in the domestic bond market within the first quarter of the year in line with its task to manage the privatization of the state’s power assets as well as to handle the liabilities of Napocor under Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001.

PSALM made its first foray in the international bond market in May last year through an issue of $1-billion global bonds due in 2019. In November, PSALM tapped the international market anew through a $1.2 billion bond exchange offer of Napocor bonds maturing in 2010 and in 2011.

This year, Napocor has P73 billion worth of maturing loans.

As of December 2009, PSALM had sold or contracted to sell 29 of Napocor’s generation assets with total operating capacity of 3,072.2 megawatts. These represent approximately 81.3 percent of the power firm’s generation assets in the Luzon and the Visayas grids.

From over $7 billion in 2007, PSALM has brought down Napocor’s debts to $5.8 billion as of end-2008 through a number of refinancing and prepayment activities.