The Power Sector Assets and Liabilities Management Corporation (PSALM) already raised $600 million unsecured notes from private placement as part of its cash infusion to sustain the operations of the remaining power plants and defray costs for contracted capacity of the de-monopolized National Power Corporation.

For this particular issue, the company tapped Deutsche Bank, Morgan Stanley & Co. and UBS AG as joint bookrunning managers. The notes issuance will mature in 2024.

The company emphasized that proceeds from the cash offering “will be used for general corporate funding requirements, including servicing payments arising from debt and independent power producer contracts.”

For the planned $1.6 billion debt swap offer for liability management on the outstanding debt obligations of NPC, government sources indicated that this will likely be completed within the week.

Lined up in the proposed debt exchange offer will cover what PSALM considers as ‘old bonds’, such as the $500 million 9.875-percent guaranteed notes due on March 16, 2010; the $700 million zero-coupon guaranteed bonds which is set to lapse on July 12, 2010 and the $400 million guaranteed floating rate note expiring on August 23, 2011.

PSALM said its ‘old bonds’ are eligible to be exchanged for newly issued US dollar-denominated guaranteed global bonds due in 2024, or the reopened US dollar-denominated guaranteed global bonds due 2019.

The firm further noted that “the bond exchange offer will help extend the maturity of the existing loans incurred by NPC and which were transferred to PSALM as mandated by Republic Act No. 9136, the Electric Power Industry Reform Act.”

PSALM had gained confidence that its successive debt exchange deals would whet investors’ appetite following recent decision of the Bangko Sentral ng Pilipinas (BSP) relaxing rules for banks and financial institutions which are participating in debt swaps set by government-owned and controlled corporations.

Despite the magnitude of privatization proceeds it fetched from the divestment of the NPC assets, PSALM noted that this will not be enough to retire the outstanding obligations of the power firm.

To sustain the viability of the remaining power plants’ operations and keep pace with its contractual obligations, PSALM would also need to tap borrowings as cash flow from operations cannot fully support NPC’s budgetary requirements.

The state-run power firm is still batting for the final approval of its application for basic rate adjustment to bring its rates closer to true costs. The Energy Regulatory Commission (ERC) just previously granted provisional approval on its rate adjustment.

PSALM already made previous prepayments of NPC debts, bringing down the company’s debt level to $5.8 billion as of 2008.