The $500 million seven-year bond issue for Napocor
International Finance Trust, the soon-to-be-privatized Filipino
National Power Corporation, had already attracted a lot of
criticism before it was put on hold for the second time on February
4. Much of this stemmed from the issue's structure, variously
described as "innovative" or "ill-conceived", depending on whom you
ask.
The deal was initially intended for the fourth quarter last year
but was delayed amidst poor market conditions following the attacks
on the World Trade Centre in New York. The second attempt at the
deal was embarrassingly abandoned at the eleventh hour by
bookrunner Bear Stearns and co-lead JPMorgan while Philippines'
president Gloria Macapagal Arroyo was in New York attending the
World Economic Forum.
The bond was structured to include political risk insurance (PRI),
which provides protection against the risk of convertibility and
transferability restrictions being imposed, and the risk of
appropriation. According to Mike Ellis...
