PSALM eyes peso bonds in 2011 to settle maturing debts

15 Oct 2010

The Power Sector Assets and Liabilities Management (PSALM) Corporation is considering raising funds in pesos next year to settle the maturing debts of the National Power Corporation next year.

PSALM President and CEO Emmanuel R. Ledesma Jr. disclosed that National Power's maturing obligations in 2011, inclusive of interest, amount to approximately USD1.2 billion. The amount consists of a USD200-million bond that will mature in March 2011, and USD400 million worth of floating rate notes that will be due in August 2011.

PSALM's present liability management program allows it to either tap the local capital market or engage in dollar financing to settle the obligations. PSALM is leaning towards raising the necessary funds in the local currency, considering the successful government launch of the peso bonds in September. The final choice, however, will depend on what the PSALM Board will deem as more advantageous to the government.

The new PSALM Board is scheduled to meet next week to discuss the Corporation's liability management program and its privatization schedule, among other matters.

Under the board-approved Liability Management Program Phase 2 (LMP-2), PSALM has peso bonds/credit facility with an aggregate amount of up to PhP50 billion, and a US dollar bond issuance of up to USD1 billion. The Corporation still has to use the remaining PhP20 billion of the PhP50-billion peso bonds.

Last April, PSALM successfully entered the domestic capital markets by offering PhP30 billion worth of five- and seven-year fixed-rate retail bonds.

LMP-2 was launched last year to address liquidity concerns regarding PSALM's maturing obligations in 2009-2011, which amounted to 34.61% of PSALM's principal payments. The program was approved by the PSALM Board on 26 August 2009.

The new Board is also expected to finalize PSALM's privatization plan for the rest of 2010 and for 2011 even as the Department of Energy (DOE) reviews the present program.

At the moment, the appointment of Independent Power Producer Administrators (IPPA) for the Unified Leyte geothermal power plant, the Naga power plant complex, and the Malaya thermal power plant has been put on hold.

Also, PSALM still has to schedule the bidding for IPPAs to administer the contracted capacities of the 782-megawatt (MW) Caliraya-Botokan-Kalayaan hydropower plants, the 100-MW Western Mindanao Power Corp., the 50-MW Southern Philippines Power Corp., the 200-MW Mindanao coal power plant, the 92.52-MW Mt. Apo 1 and 2 geothermal power plants, and the 165-MW Casecnan hydroelectric power plant.

The sale of Power Barge Nos. 101-104 set at the end of the year has likewise been put on hold.

The privatization of other remaining power plants such as the Agus-Pulangui hydro complex and the Sucat facility will follow the directions of the DOE or the PSALM Board or an appropriate authority. The sale of the Agus-Pulangui power plants, for instance, will be conducted in consultation with Congress. The Sucat plant, meanwhile, may be recommissioned by the DOE as part of its Energy Reform Agenda.

PSALM is also preparing the sale program for its real estate and other non-power assets.

Corporate Communications Division
Tel. No. (632) 9029067