Presidential Communications Operations Office



  PIA Bldg, Visayas Ave, Diliman, Quezon City, Philippines
  Wednesday, 16 October 2019 News Before 1 Feb 2012. Click for Latest
Web PIA  
 
home
 
about
 
fotos
 
info
 
links
 
ncrr01carr02r03calmimr05r06r07r08r09r10r11r12r13
 << October 2019 >> 
S M T W T F S
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31
Special News Editions:
English.Tagalog.Cebuano
Ilocano.Waray.Hiligaynon
Pangasinan.Other
PIA Specials:
NEW! Cabinet Officials
Jobs.Slides.Specials.Ads. Events.ASEAN.Multimedia
Visitors since 15 Feb 2011:
PIA News Archive:
English.Tagalog.Cebuano
Waray.Hiligaynon.Ilocano
Pangasinan.All
PIA Archive News Reader

PIA Press Release
2010/09/23

PSALM: No investment with Lehman Brothers

Manila (23 September) -- The Power Sector Assets and Liabilities Management (PSALM) Corporation belied the claim of Eastern Samar Representative Ben Evardone that the privatization firm lost PhP100 million in its deal with an international investment company that went bankrupt in 2008.

PSALM clarified that the deal it entered into with Lehman Brothers Special Financing Inc. (LBFSI) on 18 July 2007 was not an investment but a hedging transaction, specifically a Principal Only Swap (POS), which can be likened to an insurance purchase where PSALM pays an annual expense premium of 2.687% on the notional amount of USD100 million for 19 years.

In exchange, PSALM or the government has the right to buy dollars at PhP44.788 in 2028 regardless of the foreign exchange rate at that time. Counterparties for the POS deal were selected based on a comprehensive selection process under the guidance of the Government Policy Procurement Board, the Department of Finance, and the Bureau of the Treasury.

When Lehman went bankrupt, PSALM invoked the International Swaps and Derivatives Association, Inc. (ISDA) agreement, terminated the transaction on 03 November 2008, and replaced it with a new POS with the same terms and conditions. ISDA is a trade organization of participants in the market for over-the-counter derivatives. It is headquartered in New York, and has created a standardized contract (the ISDA Master Agreement) to enter into derivatives transactions.

In addition, PSALM filed for claims in the New York court for approximately USD3.4 million representing the cost of the replacement and other expenses (legal fees, damages, etc) as may be allowed under provisions of the ISDA.

Contrary to Evardone?s allegation published in news reports, PSALM did not use the proceeds from the privatization of power assets in the deal, pointing out that until May 2008 it was the National Power Corporation that had paid the required premiums. PSALM made it clear that the hedging transaction was used as an insurance against foreign exchange volatility. (PIA-MMIO) [top]

|«  prev  next  »|
DAILY NEWS LIST:
»Tagalog News: PNoy nakipagpulong sa Pangulo ng Vietnam
»Tagalog News: UST patuloy na iniimbitahan ang publiko sa kanilang Lumina Pandit exhibit
»4Ps: An answered prayer
»Davao Norte guv ready for PNoy's marching orders
»Aquino's visit reunites Davao Norte leaders
»Mati domestic airport to re-operate soon
»Davao Oriental farmers receive production enhancement assistance in organic farming
»Davao to establish food exchange complex in 3 years
»Davao military official suggests livelihood, education for IPs
»Tagalog News: POEA gagamitin mga LGU vs illegal recruitment
|«  prev  next  »|

Philippine Official Gazette | Office of the President | Presidential Communications Operations Office
For comments and feedback, please email PIA Newsdesk
Copyright © 2005 Philippine Information Agency
PIA Building, Visayas Avenue, Diliman, Quezon City 1101 Philippines