PSALM prepays $263M in Napocor debt


Posted at Jun 02 2008 03:44 PM | Updated as of Jun 02 2008 11:44 PM

The Power Sector Assets and Liabilities Management Corp. (PSALM) has prepaid 27.2 billion yen ($263 million) of National Power Corp.'s debt, reducing the company's exposure to foreign currency risks.

In a statement, PSALM said the amount represents tranche B of the Miyazawa yen-denominated loans extended by the Japanese government to Napocor in 1999 to finance various transmission projects.

"The prepayment will reduce Napocor's debt obligation and will improve its debt to GDP (gross domestic product) ratio from 31.39 percent in 2003 to 10.94 percent in 2007, as well as Napocor's debt to total GOCC (government-owned and -controlled corporation) debt ratio from 80.58 percent in 2003 to 57.15 percent in 2007," said PSALM acting vice president for finance, Lourdes Alzona.

Ferdinand Florendo, manager of PSALM's capital markets and risk management department, explained that aside from savings on interest payments and guarantee fees, "the Miyazawa prepayment reduces Napocor's foreign exchange debt by 4.0 percent and increases the peso component of the debt currency mix to 13 percent from 11 percent. This improves Napocor's liability profile by reducing the exposure of the company to foreign currency fluctuations."

Last March, PSALM prepaid 17.4 billion yen in Napocor's debt incurred from the Japan Bank of International Cooperation-Overseas Economic Cooperation Fund.

Napocor's total debt has so far been reduced by 5.6 percent. PSALM targets to reduce Napocor's debt by at least 28 percent in the next two years.

PSALM said it used the proceeds from the privatization of several government power plants to prepay the loans, pursuant to the Electric Power Industry Reform Act of 2001 or RA 9136.