PSALM to raise PhP20 billion via peso bond offer

22 Jan 2010

The Power Sector Assets and Liabilities Management (PSALM) Corporation plans to raise at least PhP20 billion from the local bond market to take advantage of domestic market liquidity and the low interest rate environment.

According to PSALM, the proceeds will be used to augment its working capital requirements and bolster its liability management program.

The issue date is targeted within the first quarter of 2010, subject to receipt of regulatory approvals.

Established on 26 June 2001 by virtue of Republic Act No. 9136, the Electric Power Industry Reform Act of 2001, PSALM, a wholly-owned government entity, was created to primarily manage the privatization of assets and the liquidation of liabilities of state utility National Power Corporation.

As of December 2009, PSALM has sold or has contracted to sell 29 of National Power's generation assets with a total operating capacity of 3,072.2 megawatts, representing approximately 81.3% of National Power's generation assets in Luzon and the Visayas.

PSALM has also privatized, by way of concession, National Power's transmission functions under the National Transmission Corporation (TransCo). The privatization of the transmission business was completed in January 2009 with the turnover of the 25-year concession to the National Grid Corporation of the Philippines (NGCP). Having remitted its upfront payment of USD987.5 million, or 25% of the USD3.95-billion purchase price, and having signed the deed of transfer, the NGCP was officially given authority to operate the country's sole transmission system starting on 15 January 2009.

In 2009, PSALM completed two capital market transactions which were both well received by the market. In May, PSALM completed its first foray into the international bond market through an issue of USD1-billion global bonds due 2019. In November, PSALM tapped the international market anew through a USD1.2-billion bond exchange offer of National Power bonds maturing in 2010 and 2011 as well as a tap into the 2019 bonds and a new issue of bonds maturing in 2024.

PSALM received positive reviews from The Asset magazine and won "Best Public Sector Borrower" for 2009, "Best New Bond Deal" for the global bond issue due 2019 executed in May last year, and "Best Privatization" for the TransCo concession in 2009.

Corporate Communications Division
Tel. No. (632) 9029067