Following the auction for the P12 billion  Pag-IBIG Fund Housing Bonds held at the Bureau of  Treasury today, Vice President and concurrent Chairman of the Housing and Urban Development Coordinating Council (HUDCC) Noli “Kabayan” De Castro announced that the bonds were oversubscribed, generating P31 billion worth of tenders,  almost triple the P12 billion offering size.

“This overwhelming response from the market validates the continuing trust of our investors including private developers, insurance companies, private and government financial institutions, in the Fund.  All of Pag-IBIG’s bond offerings since 2000 have been oversubscribed,” De Castro said.

The coupon rate, at five percent, is the lowest ever for any debt issuance by a government financial institution. “This is even lower than the secondary market rate for the five-year benchmark Philippine Dealing System Treasury Fixing (PDSTF) Rates which was recorded at 6.4269 percent,” said Jaime Fabiaña, Chief Executive Officer of the Fund.

The proceeds of the current bond issue will be used to support the Fund’s housing programs and to finance the existing P7 billion Housing Bonds which will be maturing in May this year.

“Around 300 families become new homeowners every day because of Pag-IBIG’s  housing loan program. We expect the number of borrowers to continue to grow this year and in the coming years. The Pag-IBIG bonds will help meet the demand for affordable housing loans,” the Vice President added.

The new infusion of funds will help finance the acquisition of some 80,000 housing units with value varying from P400,000 to P3,000,000.

Pag-IBIG remains as the biggest lender in housing today disbursing a total of P46 billion in housing loans in 2009.

When asked why the market had such an upbeat response to the bond issue, Fabiaña cited the features of the bonds. “The bonds are tax-exempt and tax-free.  And of course, the impact of the full guaranty of the government of the Republic of the , through the Home Guaranty Corporation, is vital as well.  The bonds also serve as alternative compliance by banks with the Agri-Agra Law (Presidential Decree 717) which requires the banking sector to allocate at least twenty-five percent (25%) of its loanable funds for  agricultural credit and as part of the reserve assets of insurance companies.”