The prospects for the development of securitization in the Philippines look better now than they ever have done. President Gloria Arroyo mentioned the issue in her State of the Nation Address this July, and senior members of Congress and the Department of Finance are currently looking at a draft bill, with a view to passing it into law by the end of the year.
Mortgage loans are one of the asset classes the government is particularly keen to securitize and a number of government housing agencies are believed to be looking into securitization as a new means of raising finance.
One of these is the National Home Mortgage Finance Corp (NHMFC), which has a mortgage portfolio worth around Ps40 billion ($780 million). An official says that the institution will invite proposals from potential advisors by the end of the month at the latest.
"We are looking for a financial advisor for the securitization of some of our mortgages," an NHMFC official comments. "We will be sending invitations to several banks, possibly by the end of next week and certainly by the end of month. The objective of this exercise is to raise funds for building new public housing."
The NHMFC looked into the possibility of securitizing mortgages back in 1999 and selected a local advisor, BFE Financial Services. However, the lack of any legal framework for securitization meant that the deal was put to one side at the time. Although such a framework is now being put in place, officials will not drawn on the likelihood for success.
"It's too early to comment on that at this time because a deal like this has not been done here before," the official comments. "We'll have to see what the financial advisor says before we can give an answer on that."
No word has been given on which banks make up the list of potential advisors, although it would no surprise to see the list include the usual suspects such as ABN AMRO, Credit Lyonnais, Credit Suisse First Boston, ING Barings, Morgan Stanley, Salomon Smith Barney and UBS Warburg.
Other potential government housing agencies that may be looking into securitization are the Housing Guaranty Corp, GSIS, Pag-Ibig Provident Fund and the Social Security System.
The government is also trying to resurrect its plan to securitize future receivables from the Malampaya natural gas exploration project, another deal that has been talked about for a couple of years.
According to market speculation, the Department of Energy has received proposals for a $500 million deal from ABN AMRO, Credit Lyonnais, ING Barings, Morgan Stanley and SSB.