SPV eyed for funding big -ticket infra projects

Players in the country’s capital markets are pushing for the regular utilization of Special Purpose Vehicles (SPVs) to fund capital-intensive infrastructure projects.

Justino Ocampo, director of the Investment House Association of the Philippines (IHAP), said investment opportunities abound for banks given the Duterte admin- istration’s program to boost infrastructure.

Ocampo, EVP and head of the investment banking group of First Metro Investment

Corp., said FMIC financed P4.1 billion in fixed rate corporate notes issued by Hedcor Sibulan, a unit of Aboitiz Power Corp.

Proceeds from the notes issue were used to fund three run- of- river hydroelectric power plants in Davao del Sur.

PDS Group president and chief executive officer Cesar Crisol said the capital market industry is strongly supportive of the government’s infrastructure program.

“This event is part of our initiative to support the government’s commitment to establish the ‘golden age for infrastructure,’ its key to spur economic development and job creation,” Crisol said.

“For 2017 alone, a recordhigh P891 billion or 5.2 percent of gross domestic product is being allocated for infrastructure,” he added.

The amount is more than what each of the six previous administrations spent on infrastructure during their entire terms, Crisol noted.

The Securities and Exchange Commission (SEC), for its part, said alternative forms of financing such as project bonds would help deepen the capital market.

“That’s what we’re trying to build up. There is too much risk lending for 30 years it’s too risky but if you are holding it in the form of a bond, you can sell it. And you cannot do that in a loan,” SEC commissioner Ephyro Amatong said.

“All players in the financial institution have a role — banks will provide the loan while the project is being constructed and then after a five or tenyear period, they can do some kind of securitization and then the bank will issue a debt paper,” Amatong said.

The Department of Finance said 64 big-ticket projects ranging from major road networks, railway systems and bus rapid transit systems to airport and seaport modernization are either for implementation or in the pipeline.

The government has raised the infrastructure budget to P1.47 trillion by 2022 from P552 billion.

Total infrastructure budget is targeted to grow to P1.83 trillion by 2022 from P861 billion this year.