NATIONAL DEVELOPMENT Corp., the investment arm of the Department of Trade and Industry, will issue on Wednesday P3.5 billion worth of Agri-Agra (AA) bonds to fund the repair and rehabilitation of various irrigation facilities nationwide.

In a statement issued yesterday, NDC said the bond proceeds would help restore about 33,000 hectares of rice lands all over the country, as well as bankroll the repair and rehabilitation of irrigation systems servicing another 20,000 hectares.

Also to be financed is the restoration of additional irrigation facilities servicing 21,600 hectares of rice land and the rehabilitation of other such facilities covering another 50,000 hectares, NDC added.

These projects would be spearheaded by the National Irrigation Administration.

The NDC?s AA Bonds carry a ?direct and unconditional? government guarantee.

These will have a minimum tenor of five years, with interest payments to be made semi-annually. Interest earned from these bonds will be tax-exempt.

According to the NDC, the AA Bonds can serve as liquidity for government deposits, as well as security for the faithful performance of trust duties.

The bond issue also serves as alternative compliance to Presidential Decree 717, or the directive titled ?Providing an Agrarian Reform Credit and Financing System for Agrarian Reform Beneficiaries through Banking Institutions.?

Institutional investors can subscribe to this issuance as the second tranche of the AA Bonds floated in 2002, which are maturing next month.

?The issuance of the long-term bonds is intended to support projects for economic growth under a revitalized rural development program to be funded by NDC,? the agency said.