Housing agency bonds get double-A credit rating

The state-led National Home Mortgage Finance Corp. has obtained a double-A credit rating from local credit watcher Philippine Rating Services Corp. for its offering of a new series of “Bahay Bonds” or debt notes backed by housing mortgage worth P420 million.

A final credit rating of PRS Baa was assigned by PhilRatings to another NHMFC debt paper, the P183.7-million Class “C” subordinated notes.

The NHMFC plans to raise a total of P603.7 million from these debt instruments.

Credits rated PRS Aa (double-A) are deemed of high quality and are subject to very low credit risk. The borrower’s capacity to meet its financial commitment on the obligation is considered “very strong,” based on Philratings’ credit metrics.

Obligations rated PRS Baa, on the other hand, exhibit “adequate protection parameters.” Adverse economic conditions and changing circumstances, however, are more likely to lead to a weakened capacity of the borrower to meet its financial commitment on the obligation.

The PRS Aa rating pertains to the second series of residential mortgage-backed securities (RMBS) issued by NHMFC, referred to as Bahay Bonds 2, or BB2. This means that the government agency borrowed against a pool of residential mortgage assets.

In a statement, PhilRatings said it arrived at the above ratings for Bahay Bonds 2 based on the following:

• Loans in the asset pool were “highly seasoned” and considered as “low-delinquent” accounts.

• The issuer has “strong” credit enhancement and standby liquidity facilities.

• There are “moderated” concerns on asset pool performance given the material amount of restructured loans included in the portfolio.

• The economic outlook for the Philippines is relatively positive.

NHMFC is packaging BB2 as a “safe, affordable and high-yielding investment security specially designed for small investors.” The five-year bonds will carry an interest rate of 4.8 percent a year. The minimum investment is P5,000.

The public offering period for the BB2 ran from July 26 to August 7 while listing on the board of Philippine Dealing and Exchange Corp. is targeted on August 17.