P5-B in equity poured into PhilGuarantee for lending to big companies
MANILA, Philippines—Large companies suffering from the impact of pandemic-induced recession may soon have their loans covered by a guarantee facility from state-run Philippine Guarantee Corp. (PhilGuarantee) through its additional P5-billion equity.
Documents showed that the Department of Budget and Management (DBM) approved on Feb. 8 and released on Wednesday (Feb. 10) the national government’s equity contribution to PhilGuarantee for its credit guarantee programs under the Bayanihan to Recover as One Act or Bayanihan 2 law.
PhilGuarantee president Alberto Pascual earlier said the agency will relaunch the guarantee program for bigger firms, just as they currently provided credit guarantees to micro, small and medium enterprises (MSMEs), marginal farmers and fishermen as well as housing loans.
Pascual had said PhilGuarantee was eyeing a maximum guarantee cover of P300 million per borrower to benefit as many struggling firms as possible, especially in “critically impacted” industries like trade, transportation and tourism and hospitality.
The additional capitalization under Bayanihan 2 will bring PhilGuarantee’s equity to about P28 billion, which will have a guarantee capacity or leverage of 20 times or about P560 billion, Pascual had said.
The recent P45 billion Bayanihan 2 releases to PhilGuarantee and state-owned Development Bank of the Philippines and Land Bank of the Philippines raised total DBM fund release for COVID-19 response since the pandemic struck to P564.66 billion as of Feb. 10.
With the Bayanihan 2 law’s validity extended until mid-2021, releases rose to P168.65 billion. Before the law expired on Dec. 19, 2020, the DBM released only P109.2 billion.
The DBM had also released P386.14 billion under the Bayanihan to Heal as One Act or Bayanihan 1 law.
At least P6.59 billion had been released from June to September 2020 after Bayanihan 1 lapsed but Bayanihan 2 was not yet enacted into law. Also, P3.28 billion was released when Bayanihan 2 expired and before its extended validity took effect on Feb. 2.
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