MANILA, Philippines - The National Food Authority (NFA) said on Friday it was looking to refinance debts of P75 billion ($1.73 billion) to stretch its maturities and reduce interest costs on short-term loans that funded record rice imports in recent years.
The state grains agency, one of the country's most heavily indebted government firms, hopes to complete the transaction by August, with the Land Bank of the Philippines and Development Bank of the Philippines as arrangers.
"We are looking to convert most of our short-term loans into 10-year debt and the plan has been favourably endorsed by the economic managers," NFA Administrator Angelito Banayo told reporters on Friday. He did not specify if the new borrowing would be via bank loans or notes issue.
The refinancing plan, which is awaiting central bank approval, covers half of the agency's current outstanding loans of P154 billion.
Banayo said a number of banks were interested in the deal, including Standard Chartered Bank, HSBC, Philippine National Bank, Banco de Oro Unibank and Rizal Commercial Banking Corp.
"As of two weeks ago, the offers from banks totaled P120 billion," he said at a media forum. "It's a vote of confidence for us despite the unhealthy financial position we inherited from the previous administration."
He said stretching NFA's debt profile would result in interest savings of as much as P2.5 billion a year, which the agency plans to use to buy more rice from local farmers.
The agency's total debts had ballooned to P177 billion at end-2010 from P12.9 billion a decade earlier, as it borrowed heavily to finance the Southeast Asian country's rice imports. It has repaid some of its loans early this year.
Before this year, the Philippines was the world's biggest rice buyer, with its 2010 purchases reaching a record 2.45 million tons.
Ample stocks from purchases since 2008 and an anticipated record rice output this year on improved weather have allowed the country to limit its imports of the grain to 860,000 tons this year.
Banayo said shipment of rice purchased early this year, including the 660,000 tons bought by the private sector, was expected to be completed by mid-September.
The Philippines plans to further reduce its rice imports in 2012 to not more than 500,000 tons, aiming to become self sufficient in the staple by the end of 2013.