Housing agency Home Guaranty Corporation (HGC) remits over P86 million in cash or half of its P173.48 million net income in 2014 as dividends to the National Government (NG) through the Bureau of the Treasury.

This is a milestone for the shelter agency which suffered financial setbacks in the early 2000s as a consequence of providing guaranty coverage to the various projects of the NG in the early ‘90s. These projects include the Smokey Mountain Development and Reclamation Project, Sariling Pabahay sa Riles, Subic Bay APEC Project, Commonwealth Enterprise Zone Project, Bilibid Viejo Urban Renewal Project and other private sector-initiated projects.

Majority of these projects experienced liquidity problems in the late ‘90s. When guaranty calls were made, HGC did not have sufficient funds to service all obligations to the investors. To raise funds, the previous HGC Board of Directors approved the flotation of zero-coupon bonds.

The annual financial charges of the issued bonds weighed heavily on the finances of HGC. The Agency started incurring losses in 2002.

In 2010, immediately upon the assumption of the new Administration and new HGC Board, with Atty. Manuel R. Sanchez as the new HGC chief, reforms in the HGC guaranty business were instituted. These reforms protected the financial interest of HGC and safeguarded the guaranty from being exploited for flawed projects. New guaranty products such as the Guaranty for Rural Banks and the Guaranty for Small Loans and Home Improvement were launched which brought new revenues for HGC. Debt-servicing was also prioritized.

In 2011, HGC settled its P3 billion zero-coupon bonds from its creditors. And in 2013, with the help from the NG, HGC settled its maturing P12 billion zeroes. This relieved HGC from paying its annual P1 billion financial charges that substantially eat up its income.

Having settled its huge debt and with a better, more robust guaranty business, HGC projects higher net income in 2015 and onwards. This follows that HGC will be giving back more to the national treasury next year and in the years to come.