People encouraged to invest in Bahay Bonds 2

THE National Home Mortgage Finance Corporation (NHMFC) encouraged the people of Davao City to invest in the agency's five-year residential mortgage-backed securitization program or the Bahay Bonds 2.

In his presentation during the general investors' briefing at the Grand Men Seng Hotel Davao, NHMFC president Felixberto Bustos Jr. said the Bahay Bonds 2 allows investors, including low-income individuals, to invest a principal amount for as low as P5,000 with a tax free interest rate of 4.80 percent per annum.

The Land Bank of the Philippines (LBP) is the bank assigned as the selling agent of bonds to primary market.

But, Bustos said even the primary market can trade the bonds to the secondary market or those investors, who purchase bonds after the original issuance.

"Participants are dealers, brokers and qualified investors who buy and/or sell in the secondary market. Public investors participate in the secondary market through brokers," Bustos said.

He said the LBP will open transactions to interested buyers, the primary market investors, of bonds from July 26 to August 7. The LBP then will issue the bonds on August 17.

Bustos said the investors will be repaid after five years on August 17, 2017, the maturity date, depending on the principal amount they have invested, which means the bigger the amount being invested the bigger the returns for the in investors.

The proceeds that will be collected from the invertors will be used to sustain the NHMPC's housing loans, as the government's major secondary mortgage institution in attracting long term funds to provide strong and sustainable housing finance.

The investments also will be used to purchase additional housing receivables from public and housing lenders.

The Bahay Bonds project was first launched on March 23, 2009, with only three primary investors, including Rizal Commercial Backing Corporation, Banco de Oro, and the LBP. The total investments reached P2.06 billion.

This time, the agency is eyeing around P300 million to be collected from the investors. The estimated number of investors availing a single bond worth P5,000 is 60,000 individuals, although there are no restrictions as to how much is the allowable investments.

Investors need to open a peso deposit account to facilitate crediting of interest and principal. Then, they must secure an application form to purchase, client information sheet, and submit to the selling agent, the LBP.

Moreover, investors will receive a validated application to purchase upon payment of Bahay Bonds, and a registry confirmation will be issued to buyers later on.