With the recent success of the issuance of BahayBonds Series 2 (BB2), Vice President Jejomar C. Binay has urged the National Home Mortgage Finance Corporation (NHMFC) to issue similar retail-based bonds in the future.
Binay, Chairman of the Housing and Urban Development Coordinating Council (HUDCC), said strong demand for the BB2 since its listing in the Philippine Dealing and Exchange Corporation (PDEx) shows that bonds designed for retail investors have a huge market potential.
“The Bahay Bonds are a safe, affordable and high-yielding investment security especially designed for the small investors. With a minimum investment of P5,000, you earn a tax-free interest rate of 4.8 percent annually over a five-year period,” he said. “This is the first ever securitization issue to be listed in the PDEx.”
The BahayBonds 2 is a five-year Residential Mortgage Backed Securities due 2017. It is the first-ever retail housing asset-backed securities in the Philippine market.
BB2’s Class A Senior Notes were offered to retail investors and reached over P420 million, exceeding NHMFC’s P300 million offer. Its Class B senior notes, which were offered to institutional investors, exceeded NHMFC’s P120 million offer.
“Demands for BahayBonds have been very strong, with over P300 million worth of Class A Senior Notes being oversubscribed by 34 percent as of closing day on August 9, 2012,” the housing czar said.
“With the listing of BahayBonds2, market prices can be made available on a daily basis,” he added.
The Vice President, who also chairs the NHMFC Board of Directors, said BB2 sales have reached P603.7 million.
“That the amount raised by NHMFC through the BahayBonds will be used for the additional purchase of secondary mortgages,” he said.
He indicated that this contributes to the fulfillment of NHMFC’s vision to be the government’s major secondary mortgage institution, able to attract long-term funds to provide strong and sustainable housing finance.
Binay commended the NHMFC headed by Dr. Felixberto U. Bustos, Jr. for the landmark transaction. He also lauded the other key players who worked together with NHMFC for the transaction’s structure.
The Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) serve as the special purpose trust bank and trustee for the issue while PDEx and Philippine Depository & Trust Corporation (PDTC) serve as trading markets and security servicer, respectively.