Landbank, DBP named financial advisers for P7-B NDC bond float

The Land Bank of the Philippines and the Development Bank of the Philippines (DBP) have been named financial advisers and credit auctioneers for a P5- to P7-billion bond float by the National Development Corp. (NDC).

Proceeds from the bond issue will be used to fund the National Government’s housing program and reimburse Landbank for its advances for land acquisitions and other expenses under the Comprehensive Agrarian Reform Program (CARP).

The LBP has spent over P3.3 billion in advance payments for lands acquired by the National Government under CARP and the amount is expected to reach P4.1 billion by end 2002. The government has not been able to reimburse the LBP.

The bonds will likely have tenures of five and seven years with interest levels of 12 to 14 percent, Landbank president and chief executive officer Gary B. Teves said in an interview.

Teves said that aside from directly spending for the CARP, the bank also incurs huge operational expenses for the implementation of program amounting to P600 million as of September.

The bond float forms part of the so-called P50-billion Economic Recovery through Agricultural Productivity (ERAP) bonds. In early 1999, the NDC was able to sell P5 billion worth of ERAP bonds and they are due to mature next year.

DBP first vice president Armando O. Samia said their financial advisers will have the option to determine the tenure and the interest level of the bond float. Offhand, Samia said they believe a five to seven-year tenure is the most practical under present market conditions.

"As the lead arrangers, we have the option whether to increase the bond volume. If we have a buyer willing to absorb a P10-billion float then we may definitely increase the volume. It depends on the market," the DBP official pointed out. "But what will be done from the proceeds is up to the NDC."

The NDC is under the Department of Trade and Industry (DTI) which has been coordinating with the Department of Finance (DOF) for the bond float.

Finance Secretary Jose Isidro Camacho said Tuesday night that part of the proceeds would be used to reimburse the Landbank for its advances for CARP. Camacho said they will continue to collect dividends from government financial institutions (GFIs) like Landbank instead of offsetting dividends from CARP advances.

Landbank issued a cash dividend of P280 million to the National Government representing 30 percent of its net earnings for calendar year 2001.

For the first nine months of the year, the bank’s net income dropped by eight percent compared to the same period last year, or from P1.143 billion to P1.051 billion this year.

Teves attributed this mainly to CARP financing and advances for loan-loss provisioning for several of its ROPOA (real and other properties owned and acquired) assets.