MANILA, Philippines—The National Home Mortgage Finance Corp. (NHMFC) on Friday offered to low- and middle-income households its Bahay Bonds 2, saying it served a dual purpose.
“It allows us not only to create a new asset class but a new investment opportunity. I think if we develop this, this would be dual purpose. It will provide funding for housing, and it will provide an investment opportunity for our countrymen who do not have saving accounts,” said NHMFC President Felixberto Bustos Jr. after the project was listed on the local fixed income exchange Philippine Dealing & Exchange Corp. Friday.
NHMFC launched Bahay Bonds 2, in which one can invest for as low as P5,000 at a tax-free interest rate of 4.80 percent a year..
Bahay Bonds is a five-year residential mortgage-backed securitization program aimed at raising P300 million to P604 million for NHMFC in order to sustain its housing loan services to its beneficiaries.
Bustos had earlier said they started selling the Bahay Bonds from July 26 to August 7. The bonds were issued by the Land Bank of the Philippines on August 17.
Bustos said investors will be repaid after five years on its maturity date of Aug. 17, 2017.
Bustos, after the public listing, also noted a central bank survey saying 80 percent of Filipinos did not have savings accounts because the returns were not good and the minimal balances were not right.
Vicente Castillo, president and CEO of the Philippine Dealing System Holdings Corp., for his part, lauded the initiative, saying it was “a model for other banks to follow.”
“We have learned from the mistake of other markets and we made sure that this bond is really for public issuance. So I really hope that this will be a model for other banks to follow,” Castillo said.
Castillo added that the method was a new way for financing home owners through the securitization market.
Vice President Jejomar Binay, also chairman of the Housing and Urban Development Coordinating Council (HUDCC) attended the event. Representatives from the NHMFC, Land Bank of the Philippines, Development Bank of the Philippines Trust, and Home Guaranty Corporation were also in attendance.