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Labor dep’t freezes processing of papers for new OFWs to Kuwait

LABOR Secretary Silvestre H. Bello III has frozen the processing of papers for new Overseas Filipino Workers (OFWs) to Kuwait, after reports of a Filipino domestic worker murdered by her Kuwaiti employers.

On Thursday, Mr. Bello said that a memorandum will be released declaring the partial deployment ban of OFWs to Kuwait. This is based on the recommendation of Labor Attache Nasser Mustafa which is still awaiting review by the Philippine Overseas Employment Administration (POEA).

Jeanelyn Villavende, the domestic worker, was allegedly killed by her employers, according to reports. Mr. Bello said in a statement Thursday that the ban “should serve as a clear message to Kuwaiti authorities. The partial ban may ripen into a total deployment ban if justice for Jeanelyn Villavende is not done.”

“We will also ask Villavende’s recruitment agency to explain their inaction. As early as September, she had complained about maltreatment and underpayment of salary. She also repeatedly requested the agency for repatriation, but they did not do anything,” he added.

Preliminary reports indicate that Ms. Villavende was beaten but an autopsy has yet to be performed.

The Palace condemned the death of Ms. Villavende which it said is a violation of an agreement to protect household service workers.

“The President is outraged by that. It is a violation of the agreement between these two countries and the incident is under investigation,” Presidential Spokesperson Salvador S. Panelo said in a briefing Thursday.

In 2018, President Rodrigo R. Duterte called for the total ban on the deployment of OFWs to Kuwait after the murder of domestic worker Joanna Demafelis. The ban lasted for four months. — Gillian M. Cortez

ABS-CBN nears 10-year low as Duterte attacks continue

ABS-CBN Corp.’s shares are headed to a 10-year low after Philippine President Rodrigo R. Duterte continued his attacks on the television network he has accused of bias, urging its owners to sell before its franchise expires in March.

Shares of the media company dropped as much as 6.3% on the first trading day in Manila this year, poised for its lowest close since March 2009. The stock ended 2019 with a 21% loss compared with the local benchmark index’s 4.7% gain for the year.

In a televised speech on Dec. 30, Mr. Duterte suggested the media firm’s franchise renewal is uncertain. He had earlier threatened to block the network’s bid to extend the franchise for 25 years. ABS-CBN has not issued a statement about Duterte’s remarks, a spokesman said.

“Your contract is expiring. I’m not sure what will happen if you renew,” Mr. Duterte said. “If I were you, I would just sell.”

The president has accused ABS-CBN as well as privately owned Philippine Daily Inquirer of unfair reporting, allegations that the media companies have denied.

Mr. Duterte also resumed his criticism of water utilities for alleged corruption in his Dec. 30 speech, threatening to sue and jail the owners of Manila Water Co. and Maynilad Water Services, Inc. He reiterated a plan for a military takeover of the water utilities’ operations.

Manila Water of Ayala Corp. and Maynilad owners Metro Pacific Investments Corp. and DMCI Holdings, Inc. are among the worst-performing Philippine stocks in 2019, plunging since early December when Mr. Duterte started his censure.

“For those of you asking where are the big fish in my fight against corruption, I’ll deliver them: Ayala and Pangilinan,” he said. “If they do something wrong, I’ll really jail them,” Mr. Duterte said, referring to the family of Jaime Augusto Zobel de Ayala, which owns Manila Water and Manuel V. Pangilinan, who chairs Metro Pacific.

The two tycoons did not immediately respond to requests for comments.

Manila Water plunged 14% in early Thursday. Metro Pacific was down 4.3%, while DMCI tumbled 3.9%. — Bloomberg

6 Underground is Netflix PH most popular show in 2019

IN THE THREE YEARS SINCE streaming giant Netflix entered the Philippines — alongside 90 other territories — in 2016, Filipinos have largely embraced streaming as a new way to consume content.

As the decade comes to a close, Netflix revealed the most popular releases of 2019 in the Philippines, a list which showed a propensity towards both local and Hollywood content.

On top of the Most Popular Releases of 2019 is Netflix’s own action-thriller, 6 Underground directed by Michael Bay and starring Ryan Reynolds. Despite being released on Dec. 13, it quickly became the most viewed title on the service.

It is important to note though than Netflix ranked the titles “by the number of accounts choosing to watch at least two minutes of a series, movie of special during its first 28 days on Netflix,” according to a release.

Following 6 Underground is Kyle Newachek’s crime-mystery film, Murder Mystery starring Jennifer Aniston and Adam Sandler.

At number three is Mikhael Red’s Eerie, a Filipino horror film starring Bea Alonzo.

Another Filipino entry is Miss Granny, directed by Joyce E. Bernal and starring Sarah Geronimo and Nova Villa. The film is the local adaptation of a 2014 Korean film of the same name.

On a separate list which includes only the most popular movie titles on the platform, 6 Underground, Murder Mystery, and Eerie held their places while Ang Babaeng Allergic sa Wifi (The Girl Allergic to Wifi) by Jun Lana occupied the ninth place. The film stars Sue Ramirez.

For series, Filipinos watched the newly released The Witcher, an action-fantasy series adapted from a book series of the same name by Polish writer Andrzej Sapkowski. The Witcher’s showrunner, Lauren Schmidt Hissrich, and its lead actor, Henry Cavill, were in the Philippines in December for the show’s press tour.

Following The Witcher is the Korean drama Hotel del Luna, a dark fantasy-comedy series starring Lee Ji-eun and Yeo Jin-goo. Two other K-dramas made it to the list: historical horror Kingdom and romantic comedy Love Alarm.

Popular Netflix Originals also made it to the list: Umbrella Academy and Stranger Things.

“This lineup shows the quality, diversity, and variety of entertainment choices that Filipinos enjoyed on Netflix in 2019, from Filipino to Hollywood and Korean movies and shows, and across multiple genres including sci-fi fantasies, live action, romantic comedies, and more,” said the Netflix press release.

PHL CONTENT FOR FILIPINO VIEWERS
What this year’s list confirmed is the appetite of Filipinos for Philippine content, something local producers have long known.

“We chuckle among ourselves and say that Netflix is learning just now what we knew all along — that Filipinos, in their heart of hearts, are romantics and family people, and that will never change,” Olivia M. Lamasan, head of ABS-CBN Films, told BusinessWorld in an e-mail interview in December.

“Local content will always be a surefire and stable subscription magnet for Filipinos. No one can tell the Filipino experience more powerfully than Filipinos themselves,” she added.

Streaming services also extend the shelf lives of Filipino content as Vincent “Ting” Nebrida, President of TBA Studios, told BusinessWorld in a separate interview, saying that being on streaming platforms allow their titles to be viewed by more people across generations.

“Because in the end, we make films not only for the Filipinos of today but also future generations,” he said.

He added that they earn “substantial revenues” from streaming, though the biggest moneymaker still is a successful theatrical release.

Among the TBA Studios films currently on Netflix are Jerrold Tarog’s historical epics Heneral Luna and Goyo: Ang Batang Heneral.

But it must be noted that not all streaming contracts pay the same as a film producer who asked not to be identified said that some acquisition contracts entail a fixed amount.

“Sometimes, streaming services buy the rights for a title for a fixed amount — this means that we won’t earn royalties every time a user watches our film,” the producer said. — Zsarlene B. Chua

Tesla must face lawsuit claiming racism at California factory

A FEDERAL JUDGE rejected Tesla Inc’s effort to dismiss claims by two former workers that the California electric car factory where they worked was a hotbed of racial hostility, clearing the way for a possible trial.

In a decision on Monday, US District Judge William Orrick in San Francisco found open questions over whether Owen Diaz and his son Demetric Di-az faced “severe and pervasive racial harassment” in 2015 and 2016 at Tesla’s factory in suburban Fremont, which employs more than 10,000 people.

The plaintiffs, who are black, said they were subjected to repeated racial epithets dozens of times, as well as racist cartoons, and that supervisors engaged in or did little to stop the racism.

Orrick said Diaz could pursue claims that Tesla allowed and did not take reasonable steps to stop racial harassment.

He said punitive damages might be available if Tesla must have known about the harassment and “ratified” it, even if only lower level workers were directly involved.

“The n-word is perhaps the most offensive and inflammatory racial slur in English, a word expressive of racial hatred and bigotry,” Orrick wrote. “This case will proceed to trial.”

A trial is scheduled for May 11, 2020.

Tesla and its lawyers did not immediately respond to requests for comment.

The Palo Alto, California-based company has faced multiple racial harassment lawsuits, but is not the only automaker to face such claims in recent years.

In 2017, Ford Motor Co. agreed to pay up to $10.1 million to settle a federal probe into alleged harassment at two Chicago plants.

Tesla has in court papers said it “did not hesitate” to address racial abuse at the Fremont factory, and there was no proof of “oppression, malice, or fraud.”

Orrick also said Diaz could pursue claims against a staffing agency that assigned him to the factory, and a liaison between Tesla and that agency.

Lawrence Organ, the plaintiffs’ lawyer, said his clients are seeking damages “in the millions” of dollars.

“Tesla is not sending a message that this kind of conduct in the workplace is not permitted,” he said in an interview.

Owen Diaz said he worked at Tesla for 11 months as an elevator operator, while Demetric Diaz spent two months as a production associate.

Allegations included a claim that Diaz’s supervisor admitted to drawing a cartoon of “a black face person with a bone in his hair” and captioned “booo,” supposedly short for “jigaboo.”

“You people can’t take a joke,” Diaz said the supervisor told him.

The case is Diaz et al v Tesla Inc. et al, US District Court, Northern District of California, No. 17-06748. — Reuters

Lawmaker seeks fast action on ABS-CBN franchise

A LEGISLATOR plans to file a resolution directing the House Committee on Legislative Franchises to “report without delay” for plenary action a consolidation of nine bills seeking the renewal of ABS-CBN Corp.’s franchise.

Rep. Edcel C. Lagman of the first district of Albay said in a press release on Thursday that he would file a resolution on Jan. 6, when the lower chamber resumes work, to push the committee to act on the media company’s franchise.

He said President Rodrigo R. Duterte’s “blatant curtailment of press freedom” for repeatedly threatening to block the renewal of ABS-CBN’s franchise, which expires in March 2020, is “ominously reminiscent of the unceremonious closure nationwide of 392 media outlets” at the outset of martial law in September 1972, including the company’s predecessor, ABS-CBN Broadcasting Corp.

The lawmaker said instead of imposing “an extrajudicial killing of the freedom of the press,” the President should go to the proper judicial or administrative forum on his “personal grievances” against ABS-CBN.

“Any deliberate and arbitrary denial of the extension of ABS-CBN’s franchise will render jobless 10,955 regular and non-regular employees as well as talent and project-based workers, and freeze P84.6-billion assets and investments,” Mr. Lagman said.

The Albay representative also called out his fellow House members, particularly the Committee on Legislative Franchises, “to act independently in exercising exclusive congressional jurisdiction on the grant of franchises, and must not be cowed by the President’s wanton rantings.”

As soon as session resumes on Jan. 20, many members of the chamber are expected to co-author Mr. Lagman’s resolution.

Meanwhile, Palawan Rep. Franz E. Alvarez, who chairs the committee, gave his assurance that the panel would be “fair and objective” in reviewing ABS-CBN’s application for franchise renewal. But he said the congressional grant is a “privilege and not a right” under the law.

“The advice of Speaker Alan [Peter S. Cayetano] to us was to make sure that we would be always fair and impartial in reviewing the application of ABS-CBN, or the application of any other public utility, for that matter. At the same time, it is Congress’ duty to accept complaints and hear issue(s) brought up in any contain or objection,” Mr. Alvarez said.

“This is why we have to hear all sides, and find out if ABS-CBN violated the provisions of its franchise,” he added.

He also said the Supreme Court had stated that the grant of a franchise is “merely a privilege emanating from the sovereign power of the State and owing its existence to a grant, is subject to regulation by the State itself by virtue of police power through administrative agencies.”

“Does the President and many others who have made statements against ABS-CBN’s election coverage and election ad placement system, have a legitimate grievance against ABS-CBN? Did ABS-CBN violate the provisions of its franchise? Can ABS-CBN credibly defend its privilege of being granted a renewal of its franchise? These are just some of the questions that our committee will seek to answer when we conduct hearings on the matter once Congress resumes session three weeks from now,” Mr. Alvarez said. — Genshen L. Espedido

Original content was Netflix’s top international draw in 2019

NETFLIX INC., touting the success of its original programming, said the most popular releases on its streaming service this year were things it produced: the comedy movie Murder Mystery and the third season of its 1980s sci-fi show Stranger Things.

The company disclosed lists of its top 10 programs in 33 countries on Dec. 30, offering the most expansive report to date of what is being watched on the world’s most popular online TV network.

Netflix’s 6 Underground, the Michael Bay-directed action movie, and its monster-hunting fantasy The Witcher also drew large US audiences.

Netflix, which once filled its service with shows and movies from other studios, is now relying more than ever on its own programming to keep viewers loyal. Partners such as Walt Disney Co. are taking back their properties in order to feed their own streaming services. Disney’s platform launched last month, and ones from Comcast Corp.’s NBCUniversal and AT&T Inc.’s WarnerMedia are due next year.

Netflix still relied on some Disney material to fill out its lineup this year. In fact, Incredibles 2, the animated movie from Disney’s Pixar unit, was Netflix’s third-most-popular new film in 2019.

The data is both revealing and limited. No outside party verified the lists, which Netflix based on viewership in the first 28 days after a show was released. The numbers count people who watched at least two minutes of a program, and Netflix relied on projections to calculate the popularity of shows and movies that were just released in December.

Because Netflix has provided so little data over the years, the lists offer some rare insight into what works on the service.

Netflix’s original movies and shows dominated across every category in both the US and abroad. Murder Mystery, which stars Adam Sandler and Jennifer Aniston, was the No. 1 program in nine countries, including Australia and Colombia.

The third season of heist show Casa de Papel, meanwhile, topped the charts in six countries, including Spain and Israel. — Bloomberg

Yields on term deposits slip on holiday flows

TERM DEPOSIT yields slipped on the first week of the year on the back of some holiday fever and the stronger performance of the peso in 2019.

Bids for the central bank’s term deposit facility (TDF) amounted to P153.434 billion on Thursday, going beyond the P90 billion on offer, according to data from the Bangko Sentral ng Pilipinas (BSP).

This week’s tenders also beat the P108.927 billion in bids the BSP received on Dec. 26 for the P130 billion on the auction block.

“The adjustment in the total offer volume takes into account the increased demand for currency following the New Year holiday,” it said in a statement on Thursday.

Banks’ tenders for the six-day deposits amounted to P48.605 billion, going beyond the P30 billion auctioned off by the central bank and also higher than the P40 billion worth of bids seen last week.

Yields for the one-week papers clocked in from 4.2% to 4.25%, a slimmer band compared to last week’s 4.2-4.35%. This resulted in an average rate of 4.2345%, slipping by 4.31 basis points (bps) from last week’s 4.2776%.

Meanwhile, tenders for the two-week deposits hit P49.172 billion, surpassing the P30 billion offered by the central bank and also higher than the P29.089 worth of bids seen on Dec. 26 against the P40 billion up for grabs.

Lenders asked for rates from 4.28% to 4.325%, a slightly narrow band compared to the 4.3% to 4.4% range last week. The average rate for the 13-day term deposits was at 4.3045%, down by 2.92 bps from the 4.3337% logged last week.

On the other hand, tenders for the 27-day papers hit P55.657 billion, higher than the P30 billion offered by the central bank and also beating the P39.838 billion in bids seen last week for a P40-billion offer.

The one-month papers fetched rates ranging 4.295% to 4.35%, a narrower range compared to the 4.285% to 4.475% margin seen on Dec. 26. This caused its average rate to settle at 4.3302%, slipping by 2.04 bps from the previous auction’s 4.3542%.

Economists said the lower TDF yields came on the back of the stronger peso and the recently concluded holidays, among others.

“It’s a short trading week and a lot of people are still on holiday mode. Little market activity is expected and this may be one of the reasons why yields have been low,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

The holidays may have partly caused premium easing for short-term funds “since accounting year-end and any accompanying window-dressing activities are already done with,” according to Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

Aside from this, Mr. Ricafort said the peso’s performance last year may have also pushed yields down.

“Relatively stronger peso exchange rate versus the dollar, among the strongest in nearly two years, also led to lower local interest rates, including BSP TDF auction yields, as stronger peso tempers any expected uptick in the headline inflation rate,” he said in an e-mail.

The peso closed at P50.685 on Thursday, weaker by five centavos from the P50.635 close on Friday last week — which was the last trading day of 2019. The peso gained P1.945 year on year from its close of P52.58 on Dec. 28, 2018.

Economists have said the peso may weaken anew in 2020 on the back of a possibly wider trade deficit and as investors wait on the sidelines for clarity about some business-related rules in the country. — Luz Wendy T. Noble

Strike not extended at Lufthansa’s Germanwings

BERLIN — The trade union representing cabin crew at Lufthansa’s budget airline Germanwings decided on Wednesday not to continue their strike for the time being after three days of stoppages led to dozens of flights being canceled.

The Ufo labor union, which called strikes from Monday to Wednesday at Germanwings, will discuss on Sunday how to proceed in the dispute with the company after deciding not to extend the strike, a spokesman said.

The cabin crew strike had led to only 20 of 220 scheduled Germanwings flights taking off in the three days, although Lufthansa subsidiaries like Austrian Airlines has given seats to stranded passengers, limiting the impact on customers.

The deadlocked collective bargaining dispute for the 22,000 cabin employees concerns pay and working conditions among other issues.

Ufo held a strike for two days in November, resulting in the cancellation of one in five flights, affecting around 180,000 passengers and costing the airline up to 20 million euros ($22.42 million). — Reuters

PhilWeb’s Valdes moves to another Ongpin firm

DENNIS O. VALDES is leaving his posts as president and director at PhilWeb Corp. to take the helm at Ongpin-led Alphaland Corp.

The listed gaming company told the stock exchange yesterday Mr. Valdes has filed his resignation effective Jan. 31 and will be replaced by current Senior Vice-President for Gaming Brian K. Ng.

“We are very pleased with the election of Brian to the post of president. His capable handling of our gaming operations over the past years gives us great confidence that he will bring fresh ideas and renewed energy to the task of propelling PhilWeb to new heights, especially as we continue our dual push in e-casino and e-bingo,” Mr. Valdes was quoted as saying in a statement.

Mr. Ng joined PhilWeb in January 2011 and has since held his current role. Before joining the gaming firm, he was managing director and country manager at Affinity Express Philippines, Inc.; vice-president and country manager at RR Donnelley Global Outsourcing; director for operations at OfficeTiger Philippines Corp.; and director of special projects at SPi Global.

He also teaches as an instructor at the undergraduate and graduate levels at Ateneo universities, where he likewise earned his Bachelor of Arts in Philosophy and Master of Business Administration.

PhilWeb is currently owned by Gregorio Ma. Araneta III after Roberto V. Ongpin sold all his shareholdings in the firm in 2017. It said it had 89 electronic gaming outlets as of end-2019, composed of 66 e-Games and 23 e-bingo outlets. In the nine months to September it reported trimming its losses by 62% to P26.79 million after a 33% rise in revenues to P394.91 million.

Alphaland, Mr. Ongpin’s other firm where Mr. Valdes will be moving into, is the company behind exclusive leisure spots and hotels such as Balesin Island Club, Alphaland Baguio Mountain Lodges and The Alpha Suites.

Shares in PhilWeb at the stock exchange slipped 3.45% to P2.52 each on Thursday. — Denise A. Valdez

Amanda comes to the rescue again in 2nd season

ANIMAL SHOW Amanda to the Rescue is coming back for a second season on Jan. 6 on Animal Planet, promising “a lot more consistency” this time around according to its star, Amanda Giese.

“[Consistency is] the most important part because the best part about Season One was the educational platform and then on top of it showing the animal — showing how they came into our care, the care we give them… and then from there finding their forever families,” Ms. Giese told BusinessWorld during a phone interview late last year.

Ms. Giese leads Panda Paws Rescue, an American non-profit animal rescue organization along with her children, Jade and Beast. They are based in Washington but have staged rescue efforts much further away — in Puerto Rico after the onslaught of Hurricane Maria in 2017, and in Hawaii after Mount Kilauea erupted last year.

On its second season, Ms. Giese said that the film crew is now “in this thing together with me” and that they are very much part of “every rescue mission,” unlike in the first season when the crew “were getting their toes wet.”

The aftermath of the rescue mission in Hawaii will be shown as a two-part special in the upcoming season.

The new season will also feature a crossover special with Pit Bulls and Parolees, another Animal Planet show which has been running for 13 seasons now. The show features Tia Torres who trains pitbulls and operates the Villalobos Rescue Center which employs parolees to care for the animals.

“[The episode] is really, really amazing because it starts with her episode and there’s no break between our episodes… You get to see the journey of a very special needs dog that we teamed up on,” she said.

For all the work she’s done both off and on camera, Ms. Giese said that what makes her happiest is “seeing how many people have learned from each episode… that’s exactly what I wanted: an educational platform.”

“The education and involvement for animal welfare there is exactly why I wanted to do and that’s everything I’m seeing,” she added.

THE ANIMAL RESCUE MOVEMENT
In the past few years, Ms. Giese observed that there has been a growing movement around the world where people are encouraged to adopt and care for rescues instead of buying animals from pet stores.

“I’ve really started seeing the most change over the past five years, but I have seen a tremendous amount of change in the past 18 months. We just passed a bill [in the US Congress in November called the Preventing Animal Cruelty and Torture Act] so we are seeing significant changes for animal welfare and animal rights. We’re also seeing a significant change in the amount of people overlooking purebreds and not caring about looks or breed, just temperament and behavior,” she said.

But there’s more to be done as movements “take a long time” because “we’re educating old school mentality.”

“We’re trying to evolve in the most positive direction possible and show humane efforts, equality, and things like that and that also counts for the animal welfare world,” she said.

“It’s going to take a while but we’re making huge, huge strides in the right direction in every single country,” she added.

Amanda to the Rescue Season 2 starts airing on Jan. 6, 9 p.m., on Animal Planet. The channel is available at Sky Cable channel 40 (SD) and 194 (HD); Cignal channel 143; G Sat channel 19; and via other cable providers. — Zsarlene B. Chua

Uber, Postmates sue to block California gig-work law

RIDE-HAILING company Uber Technologies Inc. and courier services provider Postmates Inc. asked a US court to block a California labor law set to go into effect on Wednesday, arguing the bill violates the US Constitution.

In a lawsuit filed in Los Angeles federal court on Monday, the companies and two app-based drivers said the law, which would make it harder for gig economy companies to qualify their workers as independent contractors rather than employees, was irrational, vague and incoherent.

The office of California Attorney General Xavier Becerra said in a statement on Monday it was reviewing the complaint. The bill, called AB5, faces multiple legal challenges.

The law was signed by California Governor Gavin Newsom in September and has garnered national attention, largely owing to the size of California’s workforce and the state’s leadership role in establishing policies that are frequently adopted by other states.

Backers of the bill, including labor groups, have argued the law protects workers’ rights. By classifying the contractors as employees, the companies would be subject to labor laws that require higher pay and other benefits such as medical insurance.

The bill strikes at the heart of the “gig economy” business model of technology platforms like Uber, Postmates, Lyft Inc, DoorDash and others who rely heavily on the state’s 450,000 contract workers, not full-time employees, to drive passengers or deliver food via app-based services.

Uber, Postmates and other app-based companies said the legislation compromises the flexibility prized by their workforce, and that fewer workers would be hired were they considered employees.

The companies in their Monday lawsuit called AB-5 a “thinly veiled attempt” to target and harm gig economy businesses. Singling out app-based workers violates equal protection guaranteed under the constitutions of the United States and California, the companies argued.

“It irreparably harms network companies and app-based independent service providers by denying their constitutional rights to be treated the same as others to whom they are similarly situated,” the lawsuit said.

The companies pointed to allegedly arbitrary exemptions of different non-gig worker groups, including salespeople, travel agents, construction truck drivers and commercial fishermen.

The full impact of the bill remains unclear in the short term, but the lawsuit cited a study saying the bill would increase ride-hailing company Lyft’s operating costs by 20% and lead to some 300,000 fewer drivers in California.

Ron Herrera, secretary-treasurer of Teamsters Local 396 and Teamsters International vice president, said in a statement late on Monday night, that the labour union objects the lawsuit challenging the constitutionality of AB-5.

“Teamsters Local 396 and the broader American Labor Movement must use all of the resources at our disposal to ensure that AB-5 is protected and that workers have a voice at the table,” Herrera added.

Uber, Lyft and food delivery company DoorDash have earmarked $90 million for a planned November 2020 ballot initiative that would exempt them from the law. — Reuters

Gov’t eyes tighter debt spreads

THE GOVERNMENT is planning to price its foreign bond issuances this year at “even tighter” spreads amid expectations of a credit rating upgrade in the medium term and policy easing from global central banks.

Finance Secretary Carlos G. Dominguez III said that last year, the country was able to secure tight spreads for as low as 32 basis points (bps) over benchmark relative to other countries and the state will likely continue on this trend if “favorable market conditions” permit.

“He (Mr. Dominguez) said that subject to favorable market conditions, the government intends in 2020 to price its foreign bond issuances even tighter given the credit rating upgrade, the prevailing negative benchmark yields and the expected easing from central banks as a counterweight to the weakening global economy,” the Department of Finance (DoF) said in a statement Thursday.

The country was also able to keep its first renminbi-denominated Panda bond float in 2018 in tight spreads as well as its return to the Samurai bond market that year.

The government’s 10-year global bond issue in January last year worth $1.5 billion was priced at 3.75%, 110 bps higher than the benchmark US Treasury and tighter than an initial 130 bps guidance, the DoF said.

It added that the country’s return to the European market after more than a 10-year break in May last year saw its eight-year global bond float worth €750 million ($839.4 million) to be priced at 70 bps above benchmark, “the lowest-ever EUR yield for a sovereign issuer outside the European Economic Area.”

Meanwhile, the second time the country issued three-year Panda bonds — also last May —worth 1.46 billion renminbi ($203.35 million) was priced at 32 bps, while the multi-tranche Samurai bond issuance last August worth ¥92 billion ($857.2 million) had an average spread of 37 bps.

“The tight spreads of these latest offshore bond issuances underlined investor confidence in the way the Duterte administration has soundly managed the country’s fiscal program,” Finance Assistant Secretary Antonio Lambino II was quoted as saying.

The government is eyeing to secure an “A” long-term credit rating from its current “BBB+” by 2022 while looking to graduate to the upper-middle income status this year, where the Philippines will lose the concessional loans it currently enjoys.

Mr. Dominguez said expectations of higher rates in the medium term will be offset by a credit rating upgrade as this will allow the country to borrow at lower costs and spend its savings on other programs including infrastructure, education and health.

For the private sector, a higher sovereign credit rating will also give firms access to lower borrowing rates to fund their business expansions, while Filipinos may also start availing loans from banks with lower interest rates.

“All of these will translate into larger investments and more jobs for Filipino workers. So, as you see, it is not just about getting upgrades or affirmations. It is also about upgrading the ordinary Filipino’s life,” Mr. Dominguez was quoted as saying.

An “A” credit rating roadmap is currently being drafted by the DoF, Bureau of the Treasury, National Economic and Development Authority and the Bangko Sentral ng Pilipinas.

Mr. Dominguez said the passage of the remaining packages under the comprehensive tax reform program and other economic reforms including the amendments to the Public Services Act, Retail Trade Act and the Foreign Investments Act, will help with the credit rating upgrade.

Also, he said the government will keep its debt low relative to the economy and cap it at 42% of gross domestic product.

“The upgrade is a recognition of our sound policies on liability management. We have kept our debt in check — even as we invest more in infrastructure and social services. We are committed to fiscal discipline, and this makes the Philippines a truly creditworthy sovereign in the eyes of the international financial community,” National Treasurer Rosalia V. de Leon was quoted in the statement.

For the first quarter, the government has set a P420-billion local borrowing program via a mix of short- and long-term securities.

For offshore borrowings, Ms. De Leon earlier said they will likely tap the US, European, Japanese and the Chinese markets anew this year. — B.M. Laforga

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