NDC to float P3.5B bonds
The National Development Co. (NDC) is set to offer P3.5 billion worth of Agri-Agra bonds (AA bonds) tomorrow to raise funds that would finance the projects of the National Irrigation Administration (NIA).
The AA bonds are obligations of the NDC with a direct and unconditional guarantee by the national government.
The bonds would have a term of five years from the date of issue. Interest payments shall be made semi-annually. On the part of the investors, interest income from the bonds shall be tax exempt.
The planned bond float constitutes the fourth tranche of NDC AA bonds, which are being issued in accordance with Executive Order 83 issued on Dec. 25, 1998 and Executive Order No. 530 issued in May 2006.
The AA bonds are eligible as liquidity for government deposits and as security for trust duties.
NDC said the bond proceeds will be used to fund repair and rehabilitation of irrigation facilities, which would restore some 33,000 hectares of rice land and would repair and upgrade functional irrigation systems servicing another 20,000 hectares. The funding will also restore and rehabilitate additional irrigation facilities nationwide covering 21,600 hectares and 50,000 hectares, respectively.
The bonds are an alternative compliance to Presidential Decree 717 (Agri-Agra).
Institutional bondholders can subscribe to the issuance as the second tranche of AA Bonds issued in 2002 is set to be retired in December 2009. The P2 billion is being issued to finance the maturing P2 billion bonds it floated in 2002 for NIA while the remainder of P1.5 billion would be used to fund the irrigation projects of that agency.
The NIA needs funding amounting of P6 billion yearly from 2008 to 2010 to fully restore the non-operational irrigation system in some 368,000 hectares of rice land. Once restored, these can help produce from 22.08 million to 29.44 million cavans of rice.
NIA statistics said there are some 832,000 hectares of rice land in the country with operational irrigation system.
The NDC said its funding to NIA has helped rehabilitate and restore a total of 32,103 and 23,688 hectares, respectively, nationwide.
These irrigation systems have increased the harvest period from one crop season to two or three harvest period per annum. It also provided a total of 320.76 kilometers of farm-to-market road.
The NDC has been tapped as a loan facility to help NIA attain its target of restoring irrigation systems covering 33,000 hectares of land and rehabilitating another 20,000 hectares of existing irrigated areas in 2008.
The program aims to boost palay harvests and help the country attain self sufficiency in rice by 2013.
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