The Securities and Exchange Commission (SEC) approved Friday a plan by the National Home Mortgage Finance Corp. (NHMFC) to securitize more than 1,200 residential loans, which will be held by a special purpose trust.
Under the plan, NHMFC will sell 1,291 mortgages to BALAI Bonds 2 Special Purpose Trust (BALAI Bonds 2 SPT).
The trust will then issue P319.32 million worth of asset-backed securities, comprising P150 million Class A senior notes and around P169 million Class B subordinated notes.
“Proceeds from the issuance will then be used to pay NHMFC the purchase price for the residential loans,” the SEC said in a statement.
Land Bank of the Philippines (LANDBANK) will serve as the underwriter for the notes issue.
The BALAI Bonds 2 issue is exempt from registration, because the securities will be issued to 19 investors or less. Under the Securities Regulation Code, securities sold or offered for sale to less than 20 individuals in a year do not need to be registered.
The NHMFC’s new securitization plan follows an earlier transfer of P270.25 million worth of mortgages to BALAI Bonds 1 Special Purpose Trust in December.
The purpose of the securitization exercise is to free up funds for NHMFC to lend while also helping develop a secondary market for home mortgages. — Angelica Y. Yang