National Home Mortgage Finance Corp. will issue P1.86 billion worth of five-year bonds backed by super prime accounts, with Standard Chartered Bank as its underwriter.

National Home Mortgage president Joseph Peter Sison said the bonds will be bid out in the next one to two months, with a second tranche sold before the end of the year.

He said proceeds of the bond float would be used to pay the Social Security System, Government Service Insurance System and Pag-ibig Fund, or the Home Mutual Development Fund.

National Home Mortgage provided housing loans using funds borrowed from SSS, GSIS, and Pag-ibig Fund in the late 1980s that became delinquent.

The debt instrument, dubbed “Bahay Bonds,” are being sold to qualified investors, including insurance companies as well as large commercial and universal banks.

Sison said the agency had picked Philippine National Bank as the special purpose trust for the bonds, with the Development Bank of the Philippines as the trustee bank. Land Bank of the Philippines may come in as an investor.

Sison said the bonds would be backed by 13,000 prime accounts with good payment records. “These are high- performing loans and are super prime accounts,” he said. “This is really part of our mandate. We should have done this a long time ago.”

Sison said the National Home Mortgage had 30,000 super prime accounts valued at P2.2 billion. Only 13,000 of the accounts would be securitized.

He said the P386-million balance would be kept by National Home Mortgage for liquidity purposes.

National Home Mortgage has some 225,000 accounts, 52,000 of which were sold to a special purpose vehicle set up by Deutsche Bank. The accounts consisted mainly of bad accounts from government’s Unified Housing Program during the term of President Corazon Aquino.

Sison said National Home Mortgage had conducted a road show to generate interest on the bonds. It delayed the issuance because of weak market conditions.

Sison said San Miguel Corp.’s plan to borrow P40 billion had distorted the market and raised the spreads demanded by investors.

San Miguel’s notes would become the biggest corporate bond issue in local history.

Sison said investors were looking at a spread of only 50 to 100 basis points over the benchmark during the road show. With the San Miguel announcement, the spreads increased to 125 to 150 basis points.