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4 eye NHMFC’s bad loans |
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(20 February 2004, Friday - Manila Standard)
By Eileen A. Mencias National Home Mortgage Finance Corp. (NHMFC) will push through with the bidding for P14 billion worth of bad loans Tuesday despite a Malacañang directive calling for a moratorium on foreclosures until August, finance department sources said yesterday. Four companies — Lone Star, Goldman Sachs, Deutsche Bank and Lehman Brothers — are qualified to bid for NHMFC’s bad assets. The four have paid registration fee of $30,000 that allowed them access to NHMFC’s books for due diligence examination. NHMFC hired Ernst & Young as financial adviser in its bid to create what could be the country’s first special purpose vehicle (SPV), or asset management companies as they are better known in other countries. The moratorium on foreclosures, however, could make the deal unattractive for the four companies because it could threaten the viability of the undertaking. If the winning bidder cannot foreclose on the properties, it may not have enough control to force people to pay their dues. Sources, however, said the moratorium should not discourage bidders because it lasts for only six months and allows foreclosures in some cases. For instance, accounts with no single payment since takeout are not covered by the moratorium. Restructured accounts and unoccupied units are also not covered by the moratorium on foreclosures. NHMFC’s bad loans consist of almost 60,000 housing loans. Most of them are 25-year loans with 15 more years to go. Most of the houses have a 30 to 40-square meter area on a lot covering 80 to 100 meters. The outstanding principal balance of the portfolio amounts to P14 billion but the value of the collateral is conservatively estimated at P19.5 billion. SPVs are firms that specialize in buying the bad loans of banks at a discount in exchange for the right to collect on the loans. The Philippines’ banking sector has some P500 billion worth of bad loans, which were addressed by the SPV law passed over a year ago. The bad loans have tied up the assets of banks and prevented them from lending more money that could otherwise go to more productive uses. Under the bidding rules, the winner will create the SPV for the P14 billion worth of NHMFC’s bad loans. NHMFC will have a 25 percent stake in the SPV. NHMFC’s special purpose vehicle is expected to be the country’s first as none has yet been set up since the law took effect a year ago. Hopes are high for NHMFC’s undertaking as International Finance Corp. (IFC) expressed interest in the special purpose vehicle. home | latest news |
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