Manila Bulletin
By CHINO S. LEYCO
November 25, 2011, 11:30pm
MANILA, Philippines — The national government would borrow as much as P85 billion for Power Sector Assets and Liabilities Management Corporation (PSALM) next year, the Department of Finance (DoF) said Friday.
Finance Undersecretary Rosalia B. De Leon said that borrowing for PSALM would be a prudent decision as government financing cost is at least 50 basis points lower than state agencies.
De Leon said the funding for the state energy-firm will come from domestic and overseas markets.
“There’s no decision yet,” she said when asked about the borrowing structure.
But De Leon pointed that the P85 billion is separate from the government’s own financing requirement of P727.4 billion to finance its programmed budget deficit.
The borrowings of PSALM are not paid by the government but are passed on to consumers as part of a universal charge.
PSALM has obtained P75 billion in syndicated term loan early this year to meet working capital requirements and refinance debt that fell due earlier.
The agency said it was also exploring options for its future financing requirements, including tapping the capital markets to raise funds. As of end-2009, total liabilities of PSALM stood at $16.5 billion.
Finance Secretary Cesar V. Purisima earlier said that consolidating the liability management of the various state-owned companies would enable the government to better handle its debts.
This is because the government would be able to borrow at a lower cost which in turn would improve the country’s fiscal health.
When state-owned companies borrow, they seek sovereign guarantee for their borrowings to able to make it easier for them to convince investors to lend them money.
State-owned companies also shoulder a certain amount of premium when issuing new debt.
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