The Philippines has seen its first securitization of 2006 with the completion of a PHP9.8 billion ($192 million) deal backed by tax revenues owed to local government units (LGUs) (ASR, 02/13/06). The transaction, jointly arranged by two state-owned banks - Development Bank of the Philippines and Land Bank of the Philippines - was originally due in March but was delayed by political turmoil.

The transaction, issued via the Monetization of Internal Revenue Allotment Collectables for Local Empowerment (MIRACLE) facility, allows over 21,000 LGUs access to tax revenues collected by them in 2000 and 2001. The revenues were frozen by the central government, which at the time was mired in severe fiscal difficulties.

In return for receiving the money now, LGUs agreed to take a 30% discount of the original money owed.

The program was financed by the issue of seven-year bonds, which carry a full and unconditional government guarantee. No details on pricing or distribution have been released.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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