PSALM eyes new $1-billion borrowings this year

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM) is eyeing to borrow another $1 billion through bank financing.

PSALM vice chairman and Energy Secretary Jose Ibazeta said the asset management firm is ready to undertake borrowings if market rates are at the right level.

“I think at the moment they’re still continuing their liability management,” Ibazeta said.

But the energy chief said it is still uncertain when PSALM will proceed with the financing scheme.

He said the timing of the loan will be dependent on market conditions.

“I still don’t know. It’s in the market. But my program before I left PSALM, you’re always prepared any time and any day,” he said.

“It’s not a question of not being able to issue bonds, it’s a function of interest rates and other factors,” he added.

Last March, PSALM said it is bound to raise some $1 billion to refinance the maturing obligations of the National Power Corp. (Napocor) for next year.

PSALM is an entity created under the Electric Power Industry Reform Act (EPIRA) to handle the finances of the state-owned power generation company.

Ibazeta said the amount would not only depend on the market but also on how much they would get from their application with the Energy Regulatory Commission (ERC) for universal charge (UC).

Early this year, PSALM secured the approval of the Bangko Sentral ng Pilipinas (BSP) to issue between P30 billion to P50 billion worth of bonds in the domestic market.

Ibazeta said the planned $1-billion financing would be on top of the already approved borrowing scheme of the BSP.

The BSP’s Monetary Board specifically allowed PSALM to purchase foreign exchange to pay off Napocor’s debt worth more than $400 million scheduled to mature in the next few months.

PSALM earlier announced 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 as part of its task to manage the privatization of the state’s power assets.

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.