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The Pag-IBIG Fund, the country’s most profitable tax-paying government institution, awarded on March 7, 2007 a total volume of P2 billion in the auction of its Kaunlaran ng Bayan Housing Bonds. The issue was 275 percent oversubscribed as P5.502 billion-worth of bids were tendered.

Pag-IBIG President and CEO Atty. Romero F.S. Quimbo expressed deep satisfaction at the tremendous turnout of the auction. “It’s simply fantastic! The vibrant response of the market to our latest housing bonds is overwhelming. Large private institutions like banks and pension funds/workers’ provident funds were among our major investors. Because of this, the Fund was able to price the issue at five percent per annum, which is lower than the prevailing market rate,” the Pag-IBIG CEO stated. At auction date, the secondary market rate for the five-year benchmark T-bonds was recorded at 5.82 percent. The five percent rate is also the lowest coupon ever for any bond issue by the Pag-IBIG Fund, and the lowest for any government-owned and controlled corporation (GOCC) bond issuance in recent history.

Quimbo considered the success of the bond auction as an affirmation of the private sector’s confidence on Pag-IBIG’s financial stability, liquidity and proven track record to pay its obligations. At yearend 2006, the Fund’s total assets is recorded at P191.55 billion, a 7.43 percent increase from 2005’s level of P178.30 billion. The Fund’s net income likewise grew during the past year, which at P7.7 billion is the highest income ever made in its history.

“The latest issue is a validation of investors’ continuing trust in the Pag-IBIG Fund. We have been offering bonds in the market since 2000, all of which, I am pleased to say, are oversubscribed,” the CEO added.

Individual investors also welcome

While the Fund has initially awarded the total issue size of P2 billion on the day of auction, the amount will be subject to the 35 percent clawback provision. Around P700 million worth of bonds will still be offered during the limited retail period. “Private individuals like Pag-IBIG members and oversees workers should not despair as we will also give them the opportunity to invest in the Kaunlaran ng Bayan Housing Bonds,” the Pag-IBIG head assured interested investors. While institutional investors had to shell hundreds of millions of pesos for the bonds to get five percent yield on their investments, individual bondholders will get to enjoy the same interest rate when they invest an amount as small as P10,000. “We urge our members to quickly take advantage of the retail offering from March 14 to 20, 2007. Other developers and insurance companies who were not able to participate in the bidding will be entertained from March 19 to 20,” the CEO said.

Today, the Fund is the leading source of shelter financing in the country. The fresh infusion of funds estimated at P25 billion for CY 2007, including the P2 billion housing bond flotation, will help finance the acquisition of some 50,000 housing units, estimated at an average of P500,000 per unit.

Upon the marching orders of the country’s housing czar, Vice President Noli De Castro, who also heads the Pag-IBIG Fund Board of Trustees, the Pag-IBIG Fund continues to explore novel ways to generate funds for shelter financing. Under VP De Castro’s watch, the Fund has become the main funder of President Gloria Macapagal-Arroyo’s shelter program.

“Today’s fund-raising activity shows how the government and the private sector can work hand in hand in licking the housing problem of the country. Government recognizes that it cannot do it alone. It needs to tap private sector funds. Our task in government is to primarily provide a mechanism for fund sourcing that can be trusted by the private sector. The private sector will not put in money to any of the government’s programs unless the channel of disbursement is trustworthy. And considering the continued success we have been having the past five years in terms of bond issuances, we feel confident in saying that the Pag-IBIG Fund has been able to build that trust among the private sector.” Atty. Quimbo said.

Vice President De Castro meanwhile commended the agency’s efforts. “I congratulate the Pag-IBIG Fund for the success of the housing bonds auction they conducted recently. And I commend them for undertaking such innovative fund sourcing efforts. This latest Housing Bonds issue should help ensure the steady flow of funds for housing. With major housing allies like the Pag-IBIG Fund, the government will definitely be able to face the issue of homelessness head on.”

For more information on the Kaunlaran ng Bayan Housing Bonds, please call 848-8233 or 811-4380, or visit the Development Bank of the Philippines or Land Bank of the Philippines branch nearest you. (end)