NHMFC completes P319-M BALAI Bonds issuance

Published March 2, 2021, 4:00 PM

by James A. Loyola

The National Home Mortgage Finance Corporation (NHMFC) has raised a total of P319.32 million with the closing of its fourth securitization transaction called ‘BALAI Bonds 2’, for a portion of its Residential Loan portfolio.

The transaction consists of one tranche of Senior Notes and one tranche of Subordinated Notes.

Photo credit: https://www.facebook.com/NHMFC.

The Class A Senior Notes are worth P150.0 million and shall be amortized using the Controlled Amortization method with a pre-defined amortization schedule during the Controlled Amortization Period.

The Class B Subordinated Notes are worth P169.322 million, and will be amortized after all Senior Notes have been settled, with variable interest payable quarterly.

Philippine Rating Services Corporation (PhilRatings) said it has affirmed the Conditional Credit Ratings of PRS A plus for the Class A Senior Notes, and PRS Ba for the Class B Subordinated Notes into Final Ratings. 

The Conditional Ratings were affirmed into Final Ratings upon closure of the BALAI Bonds 2 transaction and the submission of final and signed transaction documents and other requirements.

PhilRatings determined that all pertinent conditions for the Conditional Ratings have already been fulfilled.

Obligations rated PRS A have favorable investment attributes and are considered as upper-medium grade obligations.

Although obligations rated PRS A are somewhat susceptible to the adverse effects of changes in economic conditions, the obligor’s capacity to meet its financial commitments of the obligation is still strong.

Obligations rated PRS Ba, on the other hand, are less vulnerable to nonpayment than other speculative issues.

However, it faces major ongoing uncertainties relating to business, financial, or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation. 

The Final Credit Ratings and Outlook took into consideration the Asset Pool collection performance, the ongoing pandemic and economic recession, the senior and subordinated notes structure, the prepayment and interest rate risks, and the transaction participants.

This is already the fourth securitization transaction entered into by NHMFC for its total Residential Loan portfolio.

“As such, it may be expected that since the best performing assets of the portfolio have already been securitized previously, the next-best performing assets are backing the latest securitization,” PhilRatings said.