The Municipality of Nabunturan in Compostela Valley is looking at other financial instruments in order for it to finance their infrastructure project, primarily the construction of a new public market. To do this they are thinking of issuing P90 million worth of interest bearing bonds payable in 10 years. They are hoping to use this to attract people who are into bond trading and other securities.
According to Mayor Macario Humol, bond floatation is one of the revenue generation strategies proposed in the Local Government Code for them to finance their development projects.
Not wanting to go into piece-meal construction, wherein construction would happen part by part depending on the funds available. They had other options available such as getting a loan, doing a bond float or going for a build-operate-transfer scheme. In a build operate transfer scheme, the construction company would build the structure then operate it for a fix number of years for them to recoup their investment and make a profit then they would return it back to the government.
The advantage of bond floatation versus the other methods listed are : Community participation as the Local Government Code provides that bond floatation needs a series of consultations with the public. Compared to loans, bonds do not hold internal revenue allotment as collateral.
Bond floatation would entice more investors into the town. The Mayor also said that the no cure, no fee principle would apply for financial advisers, which means if they would not come up with the required amount they would not be paid.
Financial advisers are those who will handle the bond floatation’s as provided by law, these consultants are required before LGUs can issue bonds.
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1 response so far ↓
1 cha4t // Jul 18, 2008 at 8:37 pm
pls visit http://ruralurbanews.blogspot.com for the bond flotation reactions
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