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Yields on government debt decline across the board

GOVERNMENT DEBT YIELDS went down across the board due to market anticipation of rate cuts from the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve amid the release of key macroeconomic data in the coming weeks.

Yields on government securities, which move opposite to prices, declined 18.1 basis points (bp) on average on a week-on-week basis, according to PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System’s Web site last July 26.

“The recent move has still been mainly due to local factors — given market expectations of inflation continuing to move lower and the likelihood of BSP action at their upcoming policy meeting in August,” ATRAM Trust Corp. Head of Fixed Income Jose Miguel B. Liboro said in an e-mail.

“Speculation that the US Federal Reserve are poised to cut rates at their own policy meeting at the end of the month has also contributed to the bullish sentiment in the market,” Mr. Liboro added.

A bond trader said in an email that “the likelihood of a sub-2% headline inflation for the third quarter of this year” further fueled market expectations of a BSP rate cut while a “weaker second-quarter US gross domestic product (GDP) report” strengthened bets of a 25-bp Fed policy rate cut.

In a BSP report published earlier this month, headline inflation slowed to three percent in the second quarter from a 3.8% recorded in the January to March period. Last quarter’s inflation figure stood at the midpoint of the BSP’s target band for the year.

Policy rates were kept unchanged at the central bank’s June policy meeting to assess the impact of the previous rate adjustments. The BSP also revised downward its inflation forecast for the year to 2.7% from the 2.9% in May.

The BSP’s Monetary Board is set to review policy anew next week. GDP data for the second quarter will be released the same day, while July’s inflation data will be released on Aug. 6.

On the external front, the Fed is likely to cut rates at its two-day meeting this week after earlier sentiments of Fed chair Jerome Powell that the central bank will “act as appropriate” from possible headwinds to the US economy.

“Global markets were largely anchored to the dovish comments from the European Central Bank policy meeting [last] week, which were otherwise expected by global markets as weaker economic data continue to come out from the Eurozone,” the bond trader said.

At the close of trading last Friday, yields on all benchmark tenors dropped. The three-month, six-month and one-year papers went down 22.7 bps, 22.6 bps, and 23.8 bps, respectively, to yield 3.893%, 4.116%, and 4.534%.

At the belly, the two-year Treasury bonds (T-bond) fell the most, fetching 4.508%, down 26.1 bps from the previous week. Yields on the three-, four-, five-, and seven-year T-bonds also declined 21.9 bps, 18.3 bps, 15.3 bps, and 14 bps, respectively, to 4.582%, 4.647%, 4.699%, and 4.749%.

Likewise, the 10-, 20-, and 25-year papers dropped 18 bps (4.759%), 8.6 bps (4.98%), and 8.3 bps (4.98%), respectively.

Moving forward, the bond trader said: “Government yields are still expected to fetch lower from the impact of the latest reduction in the reserve requirement ratio (RRR) [last] week.”

A 50-bp reduction in universal, commercial, and thrift banks’ RRR was implemented last Friday, bringing total cuts to 200 bps.

Yields may also track global rates due to the “dovish tilt” of the European Central Bank and the widely expected rate cut from the Fed, according to the bond trader.

For his part, Robert Dan J. Roces, Security Bank Corp. Treasury Group assistant vice-president and economist, said upside risks to yields will be “repositioning and profit-taking ahead of data-heavy weeks — M3, US Fed decision, local inflation, GDP, and MB policy meeting.”

“We could see yields pull back slightly on some profit-taking prior to the event, given the run that yields have had recently. The overall trend remains intact however, and we continue to see yields move gradually lower towards the end of the year,” ATRAM Trust’s Mr. Liboro said. — Marissa Mae M. Ramos

LRWC to add up to 15 new gaming sites this year

LEISURE and Resorts World Corp. (LRWC) plans to add 10 to 15 new gaming sites in its network, banking on the growing demand for slot machines in the market.

The listed gaming firm said the new sites will service its bingo, e-casino, and slot arcade businesses. It will also focus on renovating and modernizing existing outlets to improve players’ gaming experience.

“LRWC will focus expansion programs on its retail and slot machine market entrants, which have been growing double-digit and are continuing to project a positive outlook,” the company said in a statement issued to reporters after its annual shareholders’ meeting in Pasay City last Friday.

The company ended 2018 with 192 gaming sites, making it one of the leading players in the industry. Aside from acquisitions, it will also be introducing additional products that could further fuel growth.

LRWC will use the P4.4 billion it raised from the private placement of shares to acquire the new sites.

“The capital infusion will not only help sustain LRWC’s dominance in the gaming sector through expanded footprint but will also greatly strengthen its financial position,” the company said.

The company in April raised P4.4 billion from the issuance of the unissued portion of its capital stock to six firms, namely Fortunegate Holdings Philippines, Inc., XII Capital, Inc., Colonial Group Holdings Corp., Globalist Technology Company Limited, Leisure Advantage, Inc., and Euphonious Holdings, Inc.

About 70 to 80% of the proceeds were to be used to refinance the company’s existing obligations, while about 20 to 30% were to finance expansion programs and working capital requirements.

The company earlier said it will build a $550-million integrated resort in Boracay together with Macau-based casino giant Galaxy Entertainment Group. While the 23-hectare project will house a casino, LRWC said it will only cover about 7.5% of its total floor area.

Bulk of the property’s revenues is seen to come from the resort component, which will house hotel rooms and amenities such as wellness centers, bars, lounges, and fine-dining restaurants.

LRWC is targeting families and Galaxy’s database of clients across the region to visit the resort, as well as travelers and Chinese tourists in Boracay. The company looks to open the resort by 2021.

Incorporated in 1957 originally as Atlas Fertilizer Corp., LRWC underwent a corporate restructuring program that changed its primary purpose to that of a real estate firm focused on the leisure segment.

LRWC’s net income attributable to the parent went up three percent to P84.9 million, following a five percent increase in gross revenues to P2.61 billion. — Arra B. Francia

Coffee for Peace to help expand Cotabato arabica production

DAVAO CITY — Social enterprise Coffee for Peace is planning to help expand arabica coffee production in Alamada, Cotabato to meet growing demand from foreign markets.

Joji Felicitas B. Pantoja, founder and chief executive officer of Coffee for Peace, said the conflict-affected town, with its generally elevated terrain, is ideal for producing high-quality beans.

Current arabica volume in Alamada remains small, she said.

“Right now, we just hand-process them,” Ms. Pantoja said in an interview, adding that she currently has samples at home that she is studying for moisture content.

“Most likely, sa tingin ko pa lang sa (based on my initial assessment of their) coffee, magiging (it could be) specialty coffee,” she added.

Coffee for Peace provides training to farm communities, covering not just the agricultural aspect, but also peace and reconciliation, environmental protection, and entrepreneurship.

The group’s “5 Ps” framework stands for people, peace, profit, partnership, and planet.

“We are training the farmers there. What we do (is) partner with peace-builders because that is where I started. We promote the culture of peace… We coordinate and partner with the community there,” Ms. Pantoja said.

“Then we can talk business,” she said.

Alamada is in northwestern Cotabato, in the Soccsksargen Region, and its neighbors are the provinces of Lanao del Sur and Maguindanao, which are both under the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

Coffee for Peace also works in several conflict-affected areas within BARMM.

Ms. Pantoja said the organization gets many inquiries for arabica coffee from Europe, Canada, the US, Taiwan, and South Korea, but she always has to tell potential buyers that affiliated farmers cannot yet handle major volumes.

She said the organization can typically handle orders of about 600 kilos. “The highest that I have exported is 2,000 kilos to the United States and Canada,” she added.

“They (buyers) are requesting for 38,000 kilos. I had an order from Canada and they asked me if I can supply them with 50 tons a month of arabica,” she said.

Government agencies such as the Department of Trade and Industry, she said, have been actively pushing for the production of arabica coffee to take advantage of export demand.

“The problem right now in coffee is not the market, it is the supply because we have promoted the coffee so well,” Ms. Pantoja said. — Maya M. Padillo

GM announces new leadership for Southeast Asia

BANGKOK, THAILAND — General Motors announced seasoned executive Hector Villarreal as President of GM Southeast Asia, effective immediately. Villarreal will be based in Bangkok, Thailand. Mr. Villarreal has been appointed to lead the important region of Southeast Asia following the retirement of Ian Nicholls after 27 years of distinguished service with GM.

Mr. Villarreal comes to GM Southeast Asia from his most recent position as managing director of GM Russia. In his new role, he will focus on growing the Chevrolet business and brand in Thailand and Southeast Asia, with a particular emphasis on Chevrolet’s truck and SUV strategy through the world-class Colorado and Trailblazer.

“Hector brings to Southeast Asia strong commercial acumen from his experiences leading GM businesses and functions in several international markets, including Mexico, Korea, Uzbekistan and Russia. Hector has a deep understanding of our business and a proven track record in building strong stakeholder relationships to maximize performance with our teams, distributors and dealer partners,” said Andy Dunstan, president and managing director, GMIO Strategic Markets, Alliances & Distributors.

Mr. Villarreal began his career with GM in 1990, as a Manufacturing Project Engineer at the Ramos Arizpe Plant in Mexico. Since then, he has held various positions in Mexico as well as in the US, including Industrial Engineering Manager and Vehicle Line Director. He also served as Planning and Program Management Director for GM de Mexico.

In 2012, Mr. Villarreal joined GM Korea as vice-president of Planning and Program Management, before becoming president and managing director of GM Operations Uzbekistan in 2015. In 2017, he was appointed managing director of GM Russia.

Mr. Villarreal is a mechanical engineering graduate of Instituto Tecnologico y de Estudios Superiores de Monterrey. He has a master’s degree in industrial engineering from the same institution and is married with three children.

Gaultier brings catwalk to the London stage in ‘Fashion Freak Show’

LONDON — French designer Jean Paul Gaultier brought his lively and eccentric Fashion Freak Show to the London stage last week, a musical production looking back on his life from childhood classroom sketches to the Paris haute couture catwalks.

The two-hour extravaganza, previously at Paris’ Folies Bergere hall, sees actors, dancers, and performance artists take to the stage as an eclectic mix of characters to recount Mr. Gaultier’s memories from his nearly 50 years in fashion.

Part revue, part catwalk show, the production presents new creations by Mr. Gaultier, long known as fashion’s “enfant terrible,” vintage outfits as well as references to his iconic looks from Breton striped sailor tops to the conical bra worn by Madonna during her 1990 Blonde Ambition tour.

Mr. Gaultier, who held his first catwalk show in 1976, has long been known for pushing boundaries in fashion, blurring the lines between men’s and women’s clothing, something regularly referenced in Fashion Freak Show.

Asked what he wanted audiences to take away from the show, Mr. Gaultier said: “To appreciate different kinds of beauty, that people are different.

“We are a world made of different people and anyone of us has beauty. You have to see it,” he told Reuters after Wednesday’s performance.

Opening with dancers dressed as bears wearing conical bras — the young Mr. Gaultier first created the look on his childhood teddy — the show features plenty of his staple corsets, skin-tight outfits and outlandish as well as provocative pieces.

Against the backdrop of a giant screen where Mr. Gaultier’s famous friends performed for the show, models danced to funk, disco, punk or rock as they recreated professional and personal moments in the designer’s life, including his childhood influences, visiting London and major catwalk shows.

“My dreams as a young child became reality… to see it I’ve lived that already but to make it I wanted to give homage to all the people that inspired me, the cities that inspired me,” Mr. Gaultier said.

Mr. Gaultier, who has dressed a spate of celebrities from Oscar winner Marion Cotillard to singer Lady Gaga, quit ready-to-wear fashion in 2014 to focus on haute couture and his perfume line.

Asked if there was anyone he would like to still dress, he said: “Queen Elizabeth of course but I know it’s impossible… In reality, I think it’s the people who like what I’m doing. I like to dress them.”

Fashion Freak Show runs at London’s Southbank Center until Aug. 2. — Reuters

Peso expected to trade sideways ahead of US central bank review

THE PESO will likely move sideways against the dollar ahead of the possible policy easing of the US Federal Reserve.

The local unit ended the week at P51.055 versus the greenback, up from P51.11 on Thursday, as traders positioned ahead of the release of US economic growth data by selling dollars.

Week on week, the peso was a tad lower than its P51.04-per-dollar finish on July 19.

Michael L. Ricafort, Rizal Commercial Banking Corp. economist, said the peso “will move sideways to a bit stronger versus the US dollar” this week.

“The peso could (move sideways) this week as the markets anticipate the monetary-setting meeting of the (Fed),” Mr. Ricafort said.

The US central bank is widely expected to cut interest rates by at least 25 basis points during the July 30-31 meeting of its policy-setting Federal Open Market Committee.

Earlier this month, Fed chair Jerome Powell hinted on a cut in benchmark rates in a prepared speech before the US Congress, saying the central bank will “act as appropriate” to sustain expansion as “crosscurrents” such as trade tensions and concern on global growth are weighing on the economy.

“The US central bank could cut its rate by at least 25 basis points, which could support the peso,” Mr. Ricafort said.

He added that global oil prices, which settled among its four-month lows, is also supportive of the peso.

Apart from the Fed policy meeting, a foreign exchange trader said before the weekend that the US gross domestic product (GDP) growth data will be a driver for the dollar this week.

US economic growth slowed less than expected in the second quarter as a surge in consumer spending blunted some of the drag from declining exports and a smaller inventory build, which could further allay concerns about the economy’s health.

But the fairly upbeat report from the US Commerce Department on Friday had some red flags for the 10-year-old economic expansion, the longest on record. Business investment contracted for the first time in more than three years and housing declined for a sixth straight quarter.

Gross domestic product increased at a 2.1% annualized rate in the second quarter, stepping down from an unrevised 3.1% pace in the January-March period. Economists polled by Reuters had forecast GDP increasing at a 1.8% rate in the second quarter. They estimate the speed at which the economy can grow over a long period without igniting inflation at between 1.7% and 2.0%.

US President Donald J. Trump downplayed the slowdown in growth and blamed the Fed for the loss of momentum.

For this week, Mr. Ricafort expects the peso to move between P50.80 and P51.20 versus the dollar, while the trader gave a P50.90-P51.20 range. — K.A.N. Vidal with Reuters

Deputy Speaker vows ‘big push’ on department bills, pay hikes

THE House of Representatives will make a “big push” for the creation of three new departments and work to increase the salaries of public-school teachers and government nurses, Deputy Speaker and Camarines Sur 2nd District Rep. Raymond F. Villafuerte, Jr. said in a statement Sunday.

“The House of Representatives, under the leadership of Speaker (Alan Peter S.) Cayetano, would make a big push for the immediate consideration of the new salary hike and the creation of three new departments — as endorsed by President Duterte in his 4th SONA — more so now that the head of the state economic team has neither raised any objection to nor funding concerns over these proposals,” Mr. Villafuerte said.

In his fourth State of the Nation Address (SONA), President Rodrigo R. Duterte has called for the creation of the Department of Overseas Filipino Workers, Department of Disaster Resilience, and the Department of Water Resources.

In the statement, Finance Secretary Carlos Dominguez III was quoted as saying that the creation of new departments does not require major expenditure.

“That doesn’t necessarily mean a very big expenditure because a lot of the units are already existing,” Mr. Dominguez said.

Mr. Cayetano earlier filed bills supporting the departments’ creation among the first items of legislation he submitted to the 18th Congress.

The President also pushed for the passage of a new version of the Salary Standardization Law (SSL) which is meant to give government employees better pay.

Mr. Dominguez said that the government “can afford” another increase citing the initial estimates of the Department of Budget and Management (DBM) Acting Secretary Janet B. Abuel.

Earlier this year, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno announced that the latest tranche of the salary adjustments had been scheduled for early this year but was delayed by the Budget impasse in Congress.

President Duterte signed EO no. 76, amending EO no. 201, on March 15 for the last tranche of SSL round 4. EO 76 authorized funding for the fourth tranche of the salary hike for government workers to be financed by any available appropriations from the reenacted 2018 budget.

Mr. Villafuerte was also positive that the House can pass the 2020 General Appropriations Bill by late October.

Mr. Villafuerte said that “legislators are in no mood to replicate last year’s counterproductive budget deliberations that later on forced the Duterte administration to operate on a reenacted 2018 budget and hold off on its massive spending strategy for high growth.”

He added that “the ‘absence’ in the incoming bigger chamber of those responsible for last year’s House-triggered impasse in the budget negotiations” would also make the October deadline for budget possible.

Mr. Villafuerte said the 15-month term of Mr. Cayetano under the power-sharing agreement will help ensure the speedy passage of the proposed budget. — Vince Angelo C. Ferreras

NLEX to review revenue targets

By Denise A. Valdez
Reporter

NLEX Corp. said it will review its year-end revenue target next month taking into consideration the government’s delay in approving further toll fee increases at the North Luzon Expressway (NLEx).

“We will have to revisit our revenue targets. We’re going to have our mid-year performance review next, next week,” NLEX Corp. President Luigi L. Bautista told reporters last week.

He said the company is “not where we wanted it to be” in the first half of the year, adding that its revenue is “holding up, but because of the delay, it has to really catch up.”

Mr. Bautista said at the start of the year the company set a revenue target of P16 billion, driven by the traffic growth after opening the NLEx Harbor Link Segment 10 and the assumption of a toll rate increase.

In March, the Toll Regulatory Board (TRB) gave NLEX its long-overdue approval to increase toll fees at the expressway,to partly account for the periodic toll rate increases granted by its concession agreement with the government.

It started collecting an additional P9 in the toll fee for Class 1 vehicles, P22 for Class 2 and P28 for Class 3 on Mar. 20.

The concession agreement of NLEX allows it to increase toll rates every two years, meaning it has adjustments due for the years 2012, 2014, 2016 and 2018.

“Remember the (increase due in) 2012 and 2014 that was given to us (in March) is only first tranche. And there are going to be three tranches. So pag-uusapan pa yung [we still have to talk about the] second tranche and the third tranche,” Mr. Bautista said.

“What was given to us was 2012 and 2014. So meron pa kaming [We still have] 2016 and 2018. Hindi pa rin napag-uusapan yun [We haven’t talked about those either],” he added.

But the NLEX chief noted the company is “actively in discussion with TRB” on the toll rate adjustments.

Meanwhile, Mr. Bautista said NLEX is still pursuing its plan to build a 15-kilometer expressway that will connect C3 Road to the Manila-Cavite Expressway (CAVITEx) through Roxas Boulevard.

The P95-billion NLEx-CAVITEx Port Expressway Link is an unsolicited proposal submitted by the NLEX and Cavitex Infrastructure Corp. (CIC). It aims to build an underground expressway as an alternative road to Roxas Boulevard.

“It’s still with the Department of Public Works and Highways (DPWH)… They’re doing the usual review of the design… I think they are supportive of the project naman,” Mr. Bautista said.

For his part, DPWH Secretary Mark A. Villar said the government is just asking for more details on the proposal before it awards original proponent status to the proponents.

“Kasi underground yan, so medyo complicated yung proposal. So we have to study first kung ano yung nasa plano [Because it’s underground, it’s quite a complicated proposal. So we have to study first what’s in the plan],” he said.

NLEX and CIC are under Metro Pacific Tollways Corp., the tollway unit of Metro Pacific Investments Corp. (MPIC). MPIC is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., others being PLDT, Inc. and Philex Mining Corp.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group.

Farm financing company targets P100M in loans

FARM financing platform Cropital said it hopes to release up to P100 million in loans by the end of 2019, which will bring its farmer beneficiaries to about 2,500.

“Right now, we are about 1,300 to 1,400 loans. This year, we hope to end with 2,500 loans. I am hoping we reach… P85 million to P100 million by the end of the year,” Ruel T. Amparo, chief executive officer and co-founder of Cropital, told BusinessWorld in an interview.

In 2015, Mr. Amparo lent P100,000 of his own funds to relatives in Bulacan. Later on, he formed Cropital, a platform to bring together individual lenders and farmers. Lenders directly fund least one farmer at favorable interest rates.

Since the beginning of its operations, Mr. Amparo said the company has released P50 million worth of loans.

“Cropital is a financing platform enabling farmers to have access to affordable loans,” he said.

The company is active in Pangasinan, Bulacan, Pampanga, Batangas, Laguna, Bohol, and Leyte. It has financed 746 farmers and is currently focusing on rice farmers, while starting to branch out to corn farmers.

The typical loan size is about P20,000 to P30,000 per harvest season, at an interest rate of 2%, against 20% usually charged by informal lenders. The platform can provide cash or inputs such as seed or fertilizer.

He said rice farmers even if they delay payments can usually make up for it by the next harvest.

He said that the company is willing to work with the government in order to help it tap more farmers.

“One thing na (that) we feel we’re strong at is our ability to reach to farmer groups and our ability to reach to farmers and engage them, and so far I can say there is high retention rate. Once the farmer starts with us, they stick with us… They really see the value of just one call away (from financing) if they request it,” he said.

Hyundai Dream Centre PHL’s batch 2 of automotive scholars graduates

LAST JUNE 13, the Hyundai Dream Centre Philippines (HDCP) held its second graduation ceremony for automotive technology scholars at the Hyundai Logistics Center in Calamba, Laguna. Forty-three young men and women received their graduation certificates after receiving a world-class education in automotive tech and servicing, customer communication, and work preparedness.

Inaugurated in 2018, the HDCP is an automotive training and education hub established by Hyundai Asia Resources, Inc. (HARI) in partnership with Hyundai Motor Company and global humanitarian organization Plan International. The Dream Centre aims to provide marginalized Filipino youths with comprehensive training on Hyundai vehicle repair and maintenance. The HDCP celebrated the graduation of its first batch of 45 scholars last November.

HARI President and CEO Ma. Fe Perez-Agudo congratulated the 43 scholars for completing the program. “We at HARI are so proud to see our second batch of Dreamers complete their comprehensive training program. After being launched a little over a year ago, the HDCP has already seen 88 scholars flourish and graduate. Almost 80 of these graduates have already been deployed to HARI dealerships to begin careers as technicians and service professionals.”

Hyundai Dream Centre Philippines’ second batch of Course 1 and 2 automotive technology scholars celebrate their graduation with HARI Division Head of After-Sales Service Richard Gapasin and Plan International Program Technical Manager Emilio Paz.

Hyundai has established Dream Centres in collaboration with local vocational schools in Ghana, Indonesia, Cambodia, and Vietnam. This is the first time Hyundai has partnered with a distributor to design and implement the training courses for a Dream Centre. HARI and Plan International cooperated to implement a training program made up of 3 courses adapted to the scholars’ diverse educational backgrounds. Notably, about half of the scholars were referred by Plan International from their program areas, including Samar, Leyte, Cotabato, and Maguindanao.

Bennydick James Caliao graduated top of his class in Courses 1 and 2, designed for college graduates or undergraduates. When asked how he felt after graduating, he said: “Because of Hyundai, I was able to distinguish what path I should take. They taught me how to be technically and mentally prepared for the automotive industry.” Working for Hyundai North EDSA, Mr. Caliao says he plans to continue developing his skills in the industry and to share his knowledge with his colleagues.

Francisco Suyom, Jr., meanwhile, finished ahead of his peers in Course 3, which is crafted for high school graduates. Asked to share his thoughts about his graduation, he said: “Hyundai molded me into a professional technician. The Dream Centre taught not just technology or science, but the attitude that technicians must possess in their chosen career.”

Cloudiest Tokyo summer in 129 years is hurting Japan’s retailers

JAPAN’S unusually long and cool rainy season has dampened demand for apparel, furniture and other goods, with some retailers already reporting steep drops in merchandise sales.

Shimamura Co., a chain of affordable clothing shops, reported last week that same-store sales through July 20 fell 18% from a year earlier. Many of Shimamura’s customers reach the company’s 1,433 locations in Japan via bicycle, rather than cars, so rainy days tend to have an outsized impact on revenue, a spokeswoman said.

So far, Tokyo has seen only about 44 daylight hours in July, among the least since the Japan Meteorological Agency began keeping records in 1890. There was one less Sunday this year compared with July 2018, and rain and overcast skies also appear to be keeping people at home, especially on weekends. Given that Japan’s retailers, especially Uniqlo operator Fast Retailing Co., are sensitive to seasonal weather trends, they will probably report weaker monthly sales in the coming week, according to Michael Allen, an analyst at Jefferies.

“All apparel retailers are likely to have suffered,” Allen wrote in a report, adding that the average temperature from July 1 to 25 was 22.7° Celsius, compared with 28.3° a year earlier.

Right On Co., an apparel company with 495 shops and a web store, reported a 5.9% decline in same-store sales through July 20, pointing to weak demand for summer clothing. Furniture retailer Nitori Holdings Co. posted a 5.6% drop in same-store sales through the same period, as fewer people bought bedding and other seasonal products. Representatives for Nitori and Right On declined to comment.

Shimamura’s shares fell 3.5% on Wednesday after reporting its lowest monthly same-store sales since 2003. Nitori’s stock was off slightly for the week. Fast Retailing hit a record of ¥69,810 on July 12 and the shares are up 19% this year, bolstered by overseas sales.

The Meteorological Agency hasn’t yet declared an end to this year’s rainy season. Last year’s season was unusually short, and officially ended on June 29 for the Kanto area, which includes Tokyo. That’s also likely to exaggerate comparisons this year.

The chilly weather hurt demand for summer outfits such as women’s short-sleeve shirts and undergarments, Shimamura said. United Arrows, which has more than a dozen fashion brands, may have been able to mitigate the impact of the weather because a fifth of their sales are online, a spokeswoman said. Some customers also buy fashion items earlier for autumn regardless of the recent temperature, she added.

“While customer traffic at physical stores of apparel companies could be affected by the rainy season in July, shoppers likely switched to buy online,” said Catherine Lim, an analyst at Bloomberg Intelligence. “The impact to overall sales for larger companies with an established e-commerce platform such as Fast Retailing may be less severe.” — Bloomberg

Robinsons Bank raises P5B via bonds

ROBINSONS BANK Corp. raised P5 billion from its maiden bond offering amid robust investor demand, with the lender planning to issue the next tranche before the year ends.

Robinsons Bank President and Chief Executive Officer Elfren Antonio S. Sarte said the Gokongwei-led lender booked P10 billion in demand on the first day of its two-year bond offer.

“We only announced P2.5 billion. Our order for the first day reached P10 billion. The demand is strong,” Mr. Sarte said in an interview on the sidelines of bankers’ reception at the Bangko Sentral ng Pilipinas (BSP) headquarters on Friday.

In a separate text message on Sunday, Mr. Sarte said the bank “will no longer accept new placements as the issue is oversubscribed.”

The bank wanted to raise at least P2.5 billion via two-year fixed-rate bonds, with an oversubscription option of another P2.5 billion. The offer period started last July 26 and was supposed to end on Aug. 1.

The two-year instruments carry a coupon rate of 5.125% per annum to be paid quarterly until 2021.

The fund-raising activity marks the maiden issue from the bank’s P10-billion corporate bond program. The bond issue’s proceeds are expected to support Robinsons Bank’s loan growth and improve its long-term funding position.

BDO Capital & Investment Corp. served as the sole arranger of the fund-raising activity. It also acted as a selling agent alongside Robinsons Bank and other financial institutions.

Mr. Sarte said the lender received overwhelming demand for its bond offer given the “good timing” of the offer and amid strong liquidity.

“The market is very liquid. And at the time we issued, there’s not much securities available,” he said.

The BSP completed its phased reduction in banks’ reserve requirement ratio last Friday, bringing it down to 16% for universal and commercial banks and six percent for thrift lenders, unleashing billions of pesos into the financial system.

Given the strong demand for the debt papers, Mr. Sarte said Robinsons Bank is looking at issuing the next tranche of bonds before yearend.

“I guess with the strong demand, we have to evaluate. Initially, the plan was next year, but we might advance before the year. Maganda naman response sa Robinsons Bank (The response was good),” Mr. Sarte added.

Robinsons Bank booked a P186.1-million net income in the first half of the year, 7.8% lower than P201.8 million it earned in the same period in 2018.

“Net income slightly decreased…due to revaluation loss on foreign exchange holdings amounting to P34.9 million as of June 2019,” Mr. Sarte said via text.

The bank’s net interest income stood at P1.75 billion, up 9.4% year-on-year.

Robinsons Bank’s loan portfolio stood at P68.9 billion as of end-June, 15.4% higher from the comparable year-ago period. On the funding side, total deposits were at P88.3 billion.

Still, the lender’s earnings before interest, taxes, depreciation, and amortization grew 17.8% to P461.2 million in the six months ended June from P391.5 million last year.

Overall, its assets stood at P120.8 billion at end-June, higher by 12.6% from June 2018 level.

Mr. Sarte said reaching the bank’s full-year income target “might be a stretch,” although it expects better earnings in the latter half of the year.

The bank set its 2019 income guidance at P756 million, more than double the P317.11-million net income booked in 2018.

“We expect our margins to improve in the second half of the year due to lower interest cost and better income from our treasury business,” Mr. Sarte said. — Karl Angelo N. Vidal

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