Central bank sees modest wage hikes

May 23, 2018 | 12:33 am

THE BANGKO SENTRAL ng Pilipinas (BSP) expects a modest increase in daily minimum wages this year despite fresh petitions for such pay hikes.
BSP Deputy Governor Diwa C. Guinigundo has said that monetary authorities’ latest estimates factor in an P18-20 increase in daily minimum wages to be approved by regional wage boards, following new petitions submitted by labor groups.
“In terms of demand for higher wages, there were only four out of 17 (regions) that have filed petitions for higher wages [so far],” Mr. Guinigundo told reporters recently.
“Normally, in our baseline, we have already incorporated a historical increase in wages… So we factored in between P18 to P20, so in case there are additional adjustments in minimum wage, maliit na lang ‘yun.”
Mr. Guinigundo said this is broadly in line with the amounts approved by the Labor department in previous years.
Labor groups may file requests for pay hikes with their respective Regional Tripartite Wage and Productivity Boards one year after a previously approved salary increase has taken effect.
Pending petitions include proposed wage hikes in Western Visayas (P130-150), Central Visayas (P120-155.80) and Davao (P104).
Petitions for higher salaries came as labor groups have cited the impact of Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law, beginning January this year which has eroded the purchasing power of workers given higher prices of basic goods and services.
TRAIN, coupled with the impact of rising global oil prices, have been cited as the reason behind faster inflation that averaged 4.1% from January to April. The pace is expected to quicken further and average 4.6% for the entire year, which is well beyond the central bank’s 2-4% target for 2018.
Proposals for transport fare hikes have also been sent to the Land Transportation Franchising and Regulatory Board, Mr. Guinigundo noted.
Central bank officials have said that they are watching out for such second-round effects of the tax reform law on overall inflation.
The BSP raised key interest rates by 25 basis points last week in the face of inflation that has spread to more widely used goods and services. The move was also designed to manage inflation expectations among market watchers.
Mr. Guinigundo said measures like the cash transfers, as well as the expected approval of rice tariffs to replace import quotas, are seen to temper the impact of quickening inflation.
The daily minimum wage in Metro Manila increased by P21 in October last year, compared to petitions for P184 and P259 to be added to the daily floor pay. — Melissa Luz T. Lopez

Tax perks reform may still change — DoF exec

May 23, 2018 | 12:32 am

THE DEPARTMENT of Finance (DoF) said it is open to changes in its corporate tax reform proposal, but maintained that the overall objective of streamlining incentives should not be compromised.
“We have to, for sure, rationalize the incentives. Details are something we can discuss if there’s a better suggestion. How long, what rate, what industry. That is really the meat of the reform,” Finance Undersecretary Karl Kendrick T. Chua told reporters after the first public hearing on the second of up to five tax reform packages on Tuesday at the House of Representatives.
“All these numbers, we can discuss if there’s a better proposal. But the principles, we will fight (for): performance-based, targeted, time-bound and transparent,” he added, saying: “We’re open to suggestions if they have a better proposal. If it’s backed by study, then we will accept.
“There are many studies. Of course, some want longer, some want the sector to continue to be incentivized. Again, for their sector, I’m sure they’re correct. But as a DoF official, I have to balance all the interest that will come out in the final bill.”
PROPOSAL
The Department of Finance (DoF) proposes to cut the corporate income tax (CIT) rate gradually by a percentage point annually to 25% from 30% currently — the highest in Southeast Asia — conditional on collecting an additional P26 billion from removing redundant tax incentives.
Mr. Chua said that the trigger provision would ensure that the reform would be revenue-neutral an any given time.
DoF’s proposal will repeal 123 special laws on investment incentives granted by 14 investment promotion agencies, and consolidate those consistent with the government’s medium-term Strategic Investment Priority Plan into one omnibus incentive code to be administered by a Fiscal Incentives Review Board; disallow the use of value-added tax as an investment incentive; and expand the coverage of the Tax Incentives Management and Transparency Act.
The DoF’s proposal compares to House Bill No. 7458 that seeks an annual unconditional cut in the CIT to 20%.
Last month, S&P Global Ratings revised its Philippine credit rating outlook to “positive” from “stable,” citing the first tax reform package, Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law, that took effect on Jan. 1. That law cut personal income tax rates and covered the projected foregone revenues by raising tax rates or introducing new consumption levies on a range of products, besides removing the value added tax exemption of several sectors.
Finance Secretary Carlos G. Dominguez III said in his opening statement that the DoF seeks to put in place a “pro-business, pro-investment and pro-incentives” reform package, but noted that every incentive given out “must benefit society in the form of better jobs, faster innovation and countryside development.”
“Some of the incentives granted, however, were entirely unnecessary given the inherent attractiveness of our market size, our natural and human advantages and our freshly gained competitiveness,” Mr. Dominguez noted.
House Ways and Means committee Chairman Dakila Carlo E. Cua (Quirino) said private-sector parties he has been consulting have cited the incentive streamlining push as “big concern.”
“[T]hey accuse us of changing the rules in the middle of the game,” Mr. Cua recalled.
Mr. Dominguez responded by saying the second tax reform package is “proposing the change in the laws to meet the needs of the time to make the system more fair,” noting that 99% of small and medium enterprises pay the regular CIT rate while larger firms enjoy a lower preferential rate.
“It is the right of a sovereign nation to change the game,” he said.
“When we granted incentives, we changed the game and nobody complained.”
Mr. Cua also cited uncertainty since the condition attached to the CIT cut would make it difficult for firms to plan effectively.
The Finance chief replied that the DoF is “cognizant of the concerns.”
The committee’s next public hearing will focus on private-sector concerns with the second tax reform package. — Elijah Joseph C. Tubayan

Consortium cuts period, cost for proposed NAIA rehab

May 23, 2018 | 12:31 am

THE CONSORTIUM formed by some of the country’s conglomerates has submitted a revised proposal to rehabilitate the Ninoy Aquino International Airport (NAIA), cutting the project duration from 35 years to 15 years.
Transportation Undersecretary for Aviation Manuel Antonio L. Tamayo told reporters in Bonifacio Global City, Taguig City on Monday that his department told the consortium, which submitted a P350-billion unsolicited proposal in February for NAIA’s modernization, to trim the duration of the airport’s rehabilitation to 12-15 years and adjust the cost accordingly.
“The original proposal involved an additional runway,” Mr. Tamayo recalled.
“It’s P106 or P105 billion na lang [only now]. Before, maglalagay ng additional runway kaya [they were supposed to build an additional runway; that’s why] it was super expensive. And they needed 35 years just to recover. Since it was shortened, it (additional runway) is just now an option just in case, in the future.”
He added, the revised proposal will be submitted to the National Economic and Development Authority for final approval.
The NAIA consortium is composed of seven of the country’s biggest firms, namely: Aboitiz InfraCapital, Inc.; AC Infrastructure Holdings Corp.; Alliance Global Group, Inc.; Asia’s Emerging Dragon Corp.; Filinvest Development Corp.; JG Summit Holdings, Inc. and Metro Pacific Investments Corp.
Changi Airports International Private Ltd. from Singapore will serve as the consortium’s technical partner.
Its competition is the tandem of Megawide Construction Corp. and Indian company GMR Infrastructure Ltd. that submitted a $3-billion, 18-year unsolicited proposal last March , cheaper and shorter than the NAIA consortium’s first proposal. US-based The MITRE Corp. is its technical partner.
GMR-Megawide has opposed the consortium’s plan to change its original proposal, saying in a press statement late in March: “If it is the intent of the NAIA consortium to tweak their proposal, it should be properly revised and re-submitted to the government.”
“It also follows that this re-submitted proposal should be evaluated after the GMR-Megawide proposal,” the tandem had said at that time.
In the proposal, GMR-Megawide team plans to add airport capacity to handle 72 million passengers annually.
NAIA handled 42 million passengers last year, way beyond its 30.5 million designed capacity.
GMR-Megawide said it will increase airfield capacity to 950-1,000 aircraft movements per day from 730 currently, and terminal area to more than 700,000 square meters.
Aside from adding a third runway, the original proposal of the NAIA consortium sought to expand terminals and add new taxiways. It said it aimed to increase the capacity of NAIA to 47 million passengers in two years and 65 million in four years.
The two rivals are now awaiting original proponent status to undertake this project. Once it is granted, the winning proposal will be subjected to a Swiss challenge, whereby other firms may seek to match it. But as original proponent, the group will have the advantage of presenting a counterproposal. — Denise A. Valdez

NFA moves to import more rice

May 23, 2018 | 12:30 am

THE STATE GRAINS AGENCY needs to import rice again this year to continue rebuilding its depleted buffer stock, a spokesman said on Tuesday, as it sought offers in an open tender for an additional 250,000 tons.
There is no final volume and timing yet for additional rice purchases by the National Food Authority (NFA), which needs approval by its council, said the spokesman, Rex C. Estoperez.
“We need to import more this year for the lean months,” he told reporters, referring to the July to September period when the domestic harvest is very low or almost none. “It needs planning and the budget.”
The NFA this month accepted supply offers from Vietnam and Thailand for a total volume of 250,000 tons in government-to-government deals, before Tuesday’s second tender.
The Philippines, a frequent rice buyer, may import as much as 1.4 million tons of the staple this year — among the largest rice purchases expected — based on a projection by the United States Department of Agriculture.
President Rodrigo R. Duterte wants the NFA to build up its rice buffer stock to the equivalent of 60 days of national consumption, or as much as 1.92 million tons, from less than two days of consumption in March.
The NFA sought supply of 25% broken rice variety at Tuesday’s open tender, with 13 suppliers and traders, mostly from Thailand and Vietnam, making valid offers, the NFA said.
Bids ranged from $461.75 to $465.04 per ton, below the agency’s budget of $498.25 per ton.
Delivery of the additional 250,000 tons should be completed before September, while shipments of the first 250,000 tons are expected to arrive from next week and should help ease upward pressure on domestic prices, Mr. Estoperez said.
The dwindling supply of cheap NFA rice, partly caused by delays in import approvals, spurred spikes in domestic prices. That fed into inflation, which accelerated at its fastest pace in at least five years in April. — Reuters

San Miguel to raise P10B from debt paper sale

May 23, 2018 | 12:07 am

SAN MIGUEL Corp. reported a net income attributable to equity holders of the parent of P7.33 billion in the first quarter of 2018. — *BW FILE PHOTO*

SAN MIGUEL Corp. (SMC) is raising P10 billion from the sale of debt papers to institutional investors.
The diversified conglomerate said in a disclosure to the stock exchange on Tuesday it is issuing P10 billion in corporate notes with a fixed interest rate equivalent to 5.25% per annum.
The debt, which was offered solely to qualified buyers, will be listed at the Philippine Dealing & Exchange Corp. on May 25.
BDO Capital & Investment Corp. and BPI Capital Corp. were tapped as joint lead underwriters and joint bookrunners.
SMC has the authority to issue peso-denominated fixed-rate corporate notes worth up to P20 billion after securing the green light from its board of directors on May 9.
Proceeds will be used either for refinancing the existing loan obligations and/or re-denomination of dollar-denominated obligations, or investments in its subsidiaries in existing businesses.
San Miguel has been refinancing its dollar-denominated debt to temper foreign exchange losses. In April, the conglomerate raised P20 billion from the sale of notes due 2023, 2025 and 2028.
San Miguel Head of Treasury Eduardo Sergio G. Edeza said in April the diversified conglomerate has reduced the share of foreign obligations to “less than 30%” of total debt from “a little over 40%” five years ago and intends to bring them down further to “as much as can be done.”
SMC recorded a net income attributable to equity holders of the parent of P7.335 billion in the first quarter of 2018, 18% higher than the P6.239 billion registered in the prior year, according to a regulatory filing.
Consolidated recurring net income of P19.4 billion for the first three months of the year, up by 31% from the same period a year ago, driven by the performance of its liquor, beer, food, packaging, and fuel businesses.
Shares in SMC added P1 or 0.69% to close at P145 apiece on Tuesday. — Krista Angela M. Montealegre

LRT-1 operator seeks gov’t approval to raise fares

May 23, 2018 | 12:06 am

LIGHT RAIL Manila Corp. reported the daily ridership at Light Rail Transit Line 1 averaged 459,400 passengers during the first quarter. — *BW FILE PHOTO*

THE Light Rail Manila Corp. (LRMC) is seeking to raise fares at the Light Trail Transit Line 1 (LRT-1) by P5 to P7 in August.
In a press conference on Tuesday, LRMC Chief Executive Officer Juan F. Alfonso said the company submitted a letter to the government in March asking to adjust fares by an average of P5, and a P7 hike for the end-to-end trip from Baclaran to Roosevelt.
“What we’re doing right now is we’re coordinating with LRTA (Light Rail Transit Authority) to go through the process. The process involves publishing, and then public consultation, and then approval if we’re allowed to increase the fares,” he said.
If approved by the Department of Transportation, LRMC targets to implement the fare adjustment on Aug. 1.
At present, LRT-1 fares are P15, P20 and P30, depending on distance traveled. LRT-1 fares were last adjusted in January 2015, when it was still under the government.
LRMC, a consortium of AC Infrastructure Holdings Corp., Metro Pacific Infrastructure Corp. (MPIC), and Macquarie Infrastructure Holdings (Philippines) Pte. Ltd., has been in charge of operations and maintenance of LRT-1 since September 2015.
LRMC said the fare increase is urgently needed to “catch up” with inflation, as well as to recoup the investments it has made to improve LRT-1 operations. The company said it has spent P7.5 billion to upgrade the existing system, repair of structural defects, and its on-going Cavite extension project.
Under the concession deal with the government, Mr. Alfonso said the company is allowed to adjust fares every two years.
“It’s a partnership. We made improvements, we made investments. We also gave the government support in terms of getting the tariff that was in the concession agreement… We’re trusting that the contract will be followed. All of our improvements have costs. I feel that people are willing to pay for good service,” Mr. Alfonso said in Filipino.
In 2016, LRMC also applied for a fare hike but it was rejected by the government. “It was P2.50 (increase) on average for the past two years. (The new fare adjustment) is a catch-up for the past two years,” Mr. Alfonso said.
He said the fare adjustment will allow them to continue delivering “good service” and help in increasing LRT-1 daily ridership to 700,000 to 800,000 by 2021.
For the first quarter of 2018, LRMC reported a 3% daily ridership increase to 459,400 passengers. The number of trips in a day also went up to 554 in March, from the 505 weekday average trips in March 2017.
MPIC is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains an interest in BusinessWorld through the Philippine Star Group. — Denise A. Valdez

Gov’t raises P4 billion via bonds

May 23, 2018 | 12:06 am

THE GOVERNMENT partially awarded the 10-year Treasury bonds (T-bonds) it offered on Tuesday, with yields continuing to rise, as the market still prefer short-dated papers due to the expectations of another rate hike here and abroad.
The Bureau of the Treasury (BTr) only borrowed P4.08 billion of its P10-billion program at yesterday’s auction of reissued 10-year papers with a remaining life of nine years and 10 months.
The Treasury opted to reject some tenders even as the offer was oversubscribed, with bids reaching P13.354 billion.
The average rate stood at 6.35%, 13.7 basis points higher than the 6.213% logged on April 17 when the bonds were previously issued. The bonds carry a 6.25% coupon.
Yesterday’s average, however, was lower than the 6.9625% quoted for the bonds at the secondary market before the auction.
At the close of trading, the 10-year papers rallied to fetch a 6.32% yield.
After the auction, National Treasurer Rosalia V. De Leon said the Treasury opted to partially award the bonds as market appetite was concentrated on the shorter-dated securities.
“The preference continues to be [on the short-dated tenors],” Ms. De Leon said, adding that the “sweet spot” for the investors continues to be the three- and five-year bonds.
“They’re still worried about further rate hikes by the Fed (US Federal Reserve), and eventually also the next action of the [local] central bank,” she said.
Reuters reported that Philadelphia Fed President Patrick Harker said on Monday the monetary authority should hike interest rates two or three more times this year, and could tweak as soon as next month, amid rising inflation.
Meanwhile, the policy-setting Monetary Board of the Bangko Sentral ng Pilipinas (BSP) hiked key rates by 25 basis points during their third meeting of the year amid accelerating inflation and robust economic growth.
However, BSP Deputy Governor Diwa C. Guinigundo earlier said the 25-basis-point hike is sufficient to curb rising inflation.
“Some analysts are even predicting another hike if ever by the BSP this June. They continue to have some cautiousness in terms of being able to make sure [that] they would still be within the bond curve,” Ms. De Leon added, noting that the rising oil prices and US Treasury yields were also factored in by banks.
OPTIONS
Meanwhile, Ms. De Leon said that the Treasury is considering financing options other than the regular weekly offerings following the partial awards and rejections during the previous auctions.
“We [might] have a bigger offering like a retail Treasury bond (RTB). We also have the option to do an external financing instead of domestic,” she said. “We’ll have to match it with the requirements on the spending side. But the good thing for us is the revenue collection is also improving significantly. That’s also compensating for the lower awards.”
Sought for comment, a bond trader said the result of yesterday’s auction shows the market is waiting for the announcement of an RTB.
“This auction only shows us that market is still waiting for the RTB announcement so there will be less demand for bonds with tenor of more than five years,” the trader said in a text message.
The Treasury raised P255.4 billion from its last RTB issuance in November.
The bond trader added: “Looks like more than half of the market players wanted BTr to give higher rates, but it settled at a high of 6.375%.”
The national government borrows from local and foreign sources to fund increased spending plans and boost economic activity.
The government plans to borrow a total of P888.23 billion this year to plug its budget deficit capped at three percent of the country’s gross domestic product. — Karl Angelo N. Vidal

Revolution Precrafted bags Puerto Rico project

May 23, 2018 | 12:05 am

REVOLUTION Precrafted Properties Philippines, Inc. has been tapped by Grupo Cacho, Inc. to deliver more than 2,000 residential villas in Puerto Rico, bagging its fifth international deal in the last six months.
The Antonio-led company said in a statement that it has recently signed an agreement with the Puerto Rican real estate firm for the projects on the island of Vieques and Boqueron Bay in Cabo Rojo.
“This partnership allows us to enter a highly desirable to market in a JV (joint venture) with an experienced and successful local developer. We could not be happier to have found shovel-ready local developments in Grupo Cacho’s inventory at this historic moment of the island,” Revolution Precrafted Founder and Chief Executive Officer Jose Roberto A. Antonio said in a statement.
Grupo Cacho President Roberto Cacho said the deal includes an option to increase the number of units to be built by Revolution Precrafted, depending on demand.
The project is expected to provide more housing options in Puerto Rico after Hurricane Maria hit the island-nation in September 2017. Citing figures from Puerto Rico’s housing agency, Revolution Precrafted said the calamity left 70,000 houses destroyed and 300,000 more damaged.
“This is crucial following the devastation brought about by Hurricane Maria. In our own way, we want to ensure that the people of Puerto Rico will have access to more housing options,” the company quoted Mr. Cacho as saying.
For the first phase, 27 mid-range and luxury residential units will be built on a 4.2-hectare property across the W Retreat Hotel in Vieques, located 13 kilometers east of the mainland. Each house will cover 200 to 250 square meters (sq.m.) of floor area on 1,000-sq.m. lots. The total cost is pegged at $13.5 million.
For the second phase, Revolution Precrafted will construct around 2,000 houses on a 212-hectare area near Boqueron Bay. The two- to three-bedroom villas are sized 150 sq.m., with an average lot area of around 600 sq.m.
The second phase is set to start on the first quarter of 2019. The company said each villa will cost around $250,000, and will be completed in three years.
The deal with Grupo Cacho is Revolution Precrafted’s fifth international agreement in the past six months, following its partnership with Seven Tides International for The World Islands project in Dubai, with KT Group’s Okkyin project in Myanmar, with Novo Development Ltd. for around 1,000 houses in the Caribbean, and for 85 luxury resort villas in Okinawa, Japan.
In the Philippines, the company is also supplying prefabricated structures for Batulao Artscapes in Nasugbu, Batangas for $1.1 billion and for Revolution Flavorscapes in Mexico, Pampanga for $350 million. — Arra B. Francia

AUB consolidated income climbs

May 23, 2018 | 12:05 am

ASIA UNITED Bank Corp. (AUB) reported its consolidated net income went up in the first quarter on the back of double-digit growth in its core businesses.
In a disclosure to the local bourse Tuesday, AUB said the lender and its subsidiaries, namely Cavite United Rural Bank and Rural Bank of Angeles in Pampanga, logged a consolidated net income of P797.7 million in the January to March period, up 21.3% from a year ago.
AUB said its net income last quarter was boosted by growth in interest income from loans and receivables as well as in other operating income, which rose 29.4% and 42.6%, respectively, from the comparable year-ago period.
Loans and receivables grew 29.2% to P129.6 billion at end-March from the P100.3 billion logged in the same period last year.
According to AUB, this was supported by double-digit growth in commercial loans as well as in other loan segments such as auto, housing and salary loans.
As a result, AUB’s net interest income rose 9.1% to P1.681 billion in the first quarter from P1.542 billion last year.
“We remain confident that we have the momentum to grow the business further as we continue to cater to the needs of corporates and small and medium enterprises,” AUB President Manuel A. Gomez was quoted as saying in the disclosure.
On the other hand, total deposits rose 22.6% to P166.5 billion in the first quarter from P135.8 billion last year, supported by the “continued expansion of AUB’s branch network as well as a more intensified deposit-generation campaign for branch banking and other business segments.”
The bank’s bottom line translated to a return on assets of 1.7% and return on equity of 12.2%, versus the year-ago ratios of 1.6% and 11.4%, respectively.
“We are taking advantage of our [information technology] innovation to serve our customers better and faster, particularly in our growing consumer lending business,” Mr. Gomez added.
Last month, AUB said the bank is set to launch its own QR code-based payment system called AUB Pay to take advantage of its customer base. — Karl Angelo N. Vidal

AEV preparing for leadership transition

May 23, 2018 | 12:04 am

ABOITIZ Equity Ventures President and Chief Executive Officer Erramon I. Aboitiz is set to step down in 2019. — *BW FILE PHOTO*

By Krista A.M. Montealegre, National Correspondent
THE leadership transition at Aboitiz Equity Ventures, Inc. (AEV) is on course to be completed next year, with the holding firm establishing a committee composed of top management officials to guide the company’s board of directors.
Following the company’s shareholders’ meeting on Monday, AEV said in a disclosure to the stock exchange on Tuesday it approved the creation of an executive committee and its charter.
The newly formed committee, led by AEV President and CEO Erramon I. Aboitiz, will “assist the board of directors in overseeing the company’s day-to-day operations and strategic decision making, while ensuring compliance with the company’s governance policies.”
The move is part of the reorganization at AEV, which will see Mr. Aboitiz step down as president and chief executive officer of the holding firm next year. In 2014, the group moved to extend his term by three years to 2019.
Aboitiz Power Corp. President and Chief Operating Officer Antonio R. Moraza also deferred his retirement to 2019. He was supposed to retire in 2017.
“There hasn’t been a change on our retirement date of 2019. The transition is going good,” Mr. Aboitiz said in a briefing on Monday.
“You’ve seen some of the restructuring we have done. We are on course for 2019,” he added.
AEV is the Aboitiz family’s holding firm, which has interests in power generation and distribution through Aboitiz Power Corp., banking through Union Bank of the Philippines and City Savings Bank, property through Aboitiz Land, Inc., food through Pilmico Foods Corp. and infrastructure through Aboitiz InfraCapital Corp.
In the last couple of years, Mr. Aboitiz has overseen the group’s expansion to Southeast Asia and foray into infrastructure. He is also leading the future-proofing of the businesses through the adoption of a group-wide digital transformation strategy.
“As we move closer to a unified digital experience across the Aboitiz Group, we seek to transform our business through digital technology in order to enhance customer experience, improve our operational processes, and create new business models as an evolving and competitive organization,” Mr. Aboitiz said.
AEV reported a 3% jump in first-quarter consolidated net income to P4.8 billion on the strength of its banking business despite the weakness in its power subdsidiary, the biggest contributor to earnings.
Shares in AEV added five centavos or 0.08% to settle at P62.50 each on Tuesday.

PSBank to offer LTNCDs

May 23, 2018 | 12:04 am

PHILIPPINE Savings Bank (PSBank) plans to raise up to P15 billion by selling peso-denominated long-term negotiable certificates of time deposit (LTNCD).
In a disclosure to the Philippine Stock Exchange Tuesday, the listed thrift banking arm of Ty-led Metropolitan Bank & Trust Co. said its board of directors approved the issuance of up to P15 billion in LTNCDs in two or more tranches.
The program will be conducted over a year and will carry a tenor of five-and-a-half years.
The offering still requires approval from the Bangko Sentral ng Pilipinas.
Its final terms, including the offer period as well as the interest rate, will depend on market conditions, the bank said on Tuesday.
“The issuance of LTNCTDs will give PSBank an opportunity to access long-term funding as the bank further expands its consumer banking business,” PSBank said in the disclosure.
LTNCDs are similar to regular time deposits which offer higher interest rates. However these cannot be pre-terminated. Being “negotiable” means these can be sold at the secondary market prior to maturity date.
In September 2016, PSBank announced a P10-billion LTNCD issuance program with a five-year tenor. The first tranche, which raised P3 billion, was offered in January last year.
PSBank, the second-largest thrift bank in the country in asset terms as of end-2017, booked a net income of P641.1 million in the first quarter, supported by strong revenues. — K.A.N. Vidal

AboitizPower aims to boost contracted capacity to contestable customers

May 23, 2018 | 12:03 am

By Victor V. Saulon, Sub-Editor
ABOITIZ Power Corp. is targeting to increase its contracted capacity to contestable customers by at least 100 megawatts (MW) this year as it looks to target electricity users with consumption of at least 750 kilowatts, its president said.
“You talk to them, it’s voluntary naman ’di ba. If they’re interested, then you proceed,” AboitizPower President Antonio R. Moraza told reporters on Monday.
He said the company must have contracted last year between 300 MW and 400 MW of its 3,000 MW sellable capacity to contestable customers, or those that have the power to choose where to buy their electricity.
“We’re hoping to increase that by at least a hundred [megawatts] this year again,” he added. “I’d say 400-450 [MW], around that area.”
Mr. Moraza earlier told stockholders of the company that AboitizPower is growing its open access footprint, among other plans this year, which includes the sale of the 8.8-MW biomass power plant in Batangas under its unit Aseagas Corp. for which it took a hit of P3.7 billion.
Under existing rules, consumers whose power usage reached a monthly average of at least 1 MW are required to buy their electricity from retail electricity suppliers (RES).
That threshold was meant to be lowered to 750-kilowatts (kW) but the Supreme Court issued a temporary restraining order (TRO) against the lowering of the threshold.
This was after a number of entities, including educational institutions, questioned the legality of some of the provisions under the rules issued by the Department of Energy (DoE) and the Energy Regulatory Commission (ERC).
Among others, they contested the mandatory nature of the rules. The TRO also put on hold the ERC’s mandate to issue licenses to the retail electricity suppliers.
The DoE has since issued new rules that made the RES contracting “voluntary” instead of mandatory. It has also directed the ERC to issue guidelines on the licenses of the suppliers.
Mr. Moraza said competition among suppliers to corner a bigger share of the 1-MW customers has become stiffer as contracts start to expire. Those consuming at least 750-kW are also hesitant to buy electricity from retail suppliers because the Supreme Court has yet to rule on the legality of lowering the threshold.
“It’s becoming very competitive. Everybody wants to do the same thing,” he said.
However, Mr. Moraza said that the company would go ahead and target the 750-kW market segment despite the TRO.
Luis Miguel O. Aboitiz, the company’s executive vice-president and chief operating officer of the corporate business group, said in an interview that AboitizPower holds about a quarter of the “open access” market.
“We have four RES’s. Together they have a quarter of the market… Three licenses expired,” he said, adding that their customers could be transferred to the one with a valid license.
As of the fourth quarter of last year, 78 contestable customers are in the 750-kW to 999-kW contestability threshold, while 862 customers are in the 1 MW and above level.
Majority or 856 registered customers are in Luzon and the remaining 84 are in the Visayas. Of these customers, 462 registrants are engaged in industrial activities, while 478 are into commercial ventures.
The total registrants are about 59% of the 1,598 electricity end-users that were already issued a certificate of contestability by the ERC, the Philippine Electricity Market Corp. (PEMC) said in a report. PEMC is the repository of data on the retail market.