PSALM also hopes to securitize Transco receivables
STATE-RUN Power Sector Assets and Liabilities Management Corp. hopes to raise as much as $2 billion in the first quarter next year through the issuance of peso-denominated bonds.
Proceeds of the bond issue will be used to settle maturing debts of another government agency, the cash-strapped National Power Corp.
The $2 billion would be double what PSALM had initially sought to raise.
“Based on our review, we feel that onshore peso would be a better alternative. But we’re still open [to other options, such as a bond sale in offshore market]. This is just the direction we’re leaning toward. But definitely, the issuance of dollar bonds is out of the question,” said PSALM president Emmanuel R. Ledesma Jr.
The company’s present liability management program allows it to either tap the local capital market or engage in dollar financing to settle obligations. Tapping the credit market has become more attractive since the government has begun slowing down the privatization of the state’s remaining energy assets.
Depending on market conditions at the time of issuance, Ledesma said PSALM could conduct the issuance either in a single transaction or by tranches.
Proceeds from the fund-raising will be used to service Napocor’s 2011 obligations amounting to $1.2 billion. In March 2011, $200 million worth of previously issued bonds would mature. In August that same year, $400 million worth of floating-rate notes would fall due, Ledesma said.
As of end-2009, Napocor’s total liabilities stood at a staggering $16.5 billion.
PSALM, which was created in 2001, has been tasked not only to handle the privatization of Napocor’s generation assets and contracted capacities, but to also clean up the power firm’s debt running into billions of dollars.
Under its liability management program, PSALM is also looking at “securitizing” close to $3 billion worth of receivables of National Transmission Corp. (Transco), according to Ledesma.
The agency is also considering “an outright sale” that may roughly amount to $3 billion.
“It’s still very early to tell. But we’re looking now more at an outright sale. It’s simpler and it’s more achievable for PSALM. But again, we’re looking at the full amount. If we could do the full amount, it would be good. If we can take close to $3 billion off our books, it will make our life a lot easier going forward,” Ledesma added.
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