Philippine Veterans Bank (PVB) recently participated in the initial tranche auction of the Php 6.37Bn Burley Tobacco Incremental Internal Revenue (BT-IR) Notes as a primary bank. Together with other banks, PVB committed to purchase the BT-IR Notes at a certain volume and price at the auction held last February 17, 2010.

Under Republic Act No. 8240, enacted in 1997, local government units (LGUs) producing burley and native tobacco were allocated and automatically awarded 15% of the incremental revenue collected from the excise tax on tobacco products. However, the absence of implementing rules and regulation prevented the release of funds since 1997, resulting to an accumulated LGU allocable share of Php 6.371Bn.

In November 2009, President Gloria Macapagal-Arroyo signed and issued Executive Order No. 843, allowing the immediate release of the government obligation, without disruption to fiscal targets. Pursuant to this, the Department of Budget and Management (DBM) issued to the beneficiary LGUs a Notice of Payment Schedule (NPS), indicating and providing the annual release of funds over seven years. The NPS constitutes an obligation of the National Government (NG), confirmed by the Department of Finance.

The League of Native and Burley Tobacco Growing Local Government Units (LNBTG-LGU), headed by its president, Congressman Mark O. Cojuangco, spearheaded the Monetization Program that will allow LGUs to securitize and monetize their NPS or the BT-IR Monetization Program.

A Special Purpose Trust (SPT) was created to accept the conveyance by the participating LGUs of their respective shares in the BT-IR as evidenced by their NPS against which the SPT shall issue zero-coupon notes (the BT-IR Notes) up to the aggregate principal amount of NPS assigned to the SPT, with maturity dates corresponding to the respective payment dates of the tranches of the BT-IR to be paid by the DBM.

Last March 16, the bank also participated aggressively in the second tranche auction which saw PVB awarded a P1,733,328,895 of the total P5.4 billion auctioned that day. Aside from PVB, others awarded included RCBC, Chinabank, Private Education Retirement Annuity Association (PERAA) and RCBC Capital. A third tranche aution completing the P6.37 billion BTI-IR notes has yet to be scheduled.

At the BT-IR Auction: (L-R) Landbank AVP & Trust OIC Alex Manlangit, PVB VP & Corporate Finance Head Carlos Rheal Cervantes, Senate President Juan Ponce Enrile, Value Note President Norby Ong, PVB EVP & Account Management Division Head Severo Leagogo, amd LNTBG President Congressman Mark Cojuangco.

Other PVB News



For any questions or clarifications, please call:
Mike Villa-Real
Vice-President
Corporate Communications and Marketing Services Dept.
Tel: 902-1670
Email: mcvillareal@veteransbank.com.ph