NHMFC to securitize P270 million loans

(The Philippine Star) - October 21, 2019 - 12:00am

MANILA, Philippines — National Home Mortgage Finance Corp. (NHMFC) is planning a third securitization exercise for a portion of its residential loan portfolio.

The transaction has been dubbed ‘BALAI Bonds 1’ and involves a total issuance amount of around P270.251 million, consisting of one tranche of senior notes and one tranche of subordinated notes.

The Class A senior notes are worth P175 million, and shall be amortized using the controlled amortization method with a pre-defined amortization schedule during the controlled amortization period.

The Class B subordinated notes, on the other hand, are worth around P95.25 million and will be amortized after all senior notes have been settled, with variable interest payable quarterly.

 Philippine Rating Services Corp. (PhilRatings) assigned conditional issue credit ratings of PRS A plus for the Class A senior notes, and PRS Ba plus for the Class B subordinated notes. 

Obligations rated PRS A have favorable investment attributes and are considered as upper-medium grade obligations. Although obligations rated PRS A are somewhat susceptible to the adverse effects of changes in economic conditions, the issuer’s capacity to meet its financial obligation is still strong.

Obligations rated PRS Ba, on the other hand, are less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties relating to business, financial, or economic conditions, which could lead to the obligors inadequate capacity to meet its financial commitment on the obligation.  

A stable outlook was likewise assigned to the ratings.  This means the rating is likely to be maintained or to remain unchanged in the next 12 months.

The ratings for BALAI Bonds 1 are considered conditional until the executed documentation for the transaction has been submitted to PhilRatings for review.

The conditional credit ratings and outlook took into consideration the asset pool collection performance, economic outlook,  senior and subordinated notes structure, prepayment and interest rate risks and transaction participants. 

This is already the third securitization transaction entered into by NHMFC for its total residential loan portfolio. Since the last securitization transaction in 2012, only 2.3 percent  of the BALAI Bonds 1 Asset Pool was originated past 2013.

As of June 30, 2019, the asset pool for BALAI Bonds 1 was composed of 2,310 residential loans. PhilRating, however, noted that 72 percent of the portfolio, consisting of 1,666 loan accounts, had undergone restructuring, and with 45 percent of these restructured accounts having undergone a restructuring more than once.






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