The National Food Authority (NFA)’s emerging financial deficit is lower this year at P32 billion from P61 billion in 2008, mostly because of lower prices of imported rice and lower volume of shipment.

Finance Undersecretary Jeremias N. Paul said the NFA is also considering floating more bonds to raise money. “It will depend on the market (it) will signal the next possible NFA bonds,” he said.

National Treasurer Roberto Tan said if the market condition is positive they will pursue a NFA bond auction immediately.

In late October NFA raised P9 billion in 10-year treasury bonds to pay for maturing loans, capital expenditures and for rice imports. The issue size was P5 billion.

NFA is expected to issue P10 billion more in long-term notes, possibly in December.

The agency has an authority to issue P35 billion as bonds, of which P13 billion had been sold. The first two bond float was for liability management.

The bonds will be issued in the domestic market but the timing will depend on debt market conditions, Paul reiterated.

NFA has National Government’s full guarantee for the issuance.

Last May, NFA had requested the Bangko Sentral ng Pilipinas (BSP) to extend the validity period on the remaining balance of the P35 billion notes earlier approved by the Monetary Board. The NFA can issue up to the end of 2010.

There was a proposal before from NFA for BSP to certify the P27-billion bond issue as reserve eligible securities similar to ERAP (Economic Recovery through Agricultural Productivity) bonds, which were zeroes. The BSP has thumbed down this proposal.

Last year, NFA was supposed to issue P35 billion worth of bonds to refinance short-term loans but the NFA board decided not to issue more bonds, opting instead to avail of existing credit rather than issue debt papers to raise funds.

NFA issued only P8 billion 10-year bonds in 2008 which were used partly for rice procurement.

NFA imports rice to replenish the stocks and compensate the growing gap between production and consumption. The agency also distributes rice to the poorer-income group at below market prices.
NFA’s outstanding debts total P115 billion.