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Yes, bolo ties are actually a thing now

BOLOS, the official neckwear of Arizona, New Mexico, and Texas and the ne plus ultra for the Western cowboy for over 60 years, are having a moment on fashionable young necks. In Paris, Balmain featured $550 gold-toned bolo ties in their spring 2018 menswear show — and promptly sold out. On Instagram, the #BoloTie hashtag has 50,446 posts and counting from both guys and gals being equally ironic and serious (or, seriously ironic) in their style choice. On the internet, searches for “bolo tie amazon” have increased 120% over the past 12 months, according to Google Trends.

The word “bolo” is derived from boleadora, an Argentine lariat, or rope used to lasso, although the neckwear’s actual origin is a mystery. One fella, Victor Cedarstaff, claims he is the creator: Back in the late 1940s, his hat flew off while he was riding his horse; so as not to lose his hatband, he simply slung it around his neck, and an iconic accessory was born. And so it goes.

The neck lasso — or bolas, bootlace, or shoestring ties as they have also been called — made it into mainstream fashion in the 1980s, when it was coveted by Rockabilly and New Wave bands. It has continued to pop up on eccentric celebrities ever since, from Billy Murray to Johnny Depp, Ed Ruscha to Bruno Mars, and, of course, Macklemore. And like the resurgence in ugly sneakers and all things archival, that brings us to today.

“This summer, we definitely have seen a lot of grooms purchase these for their groomsmen and/or themselves for their big day,” says Hayley Faw, co-founder of the jewelry brand Apse Adorn. It’s been making bolos for about two years now. “We even designed seven custom bolos for one groom, who wanted each of his groomsmen to sport a different pendant style.”

As to their appeal, Faw thinks men in particular are getting more adventurous with their style. “Bolos are a really simple — and meaningful — way to test the ‘accessory waters’ without going into full blown jewelry,” she tells Bloomberg.

Designer Gogo Ferguson, who cast an alligator-claw tie bolo has seen this trend before. “Bolos seem to come and go like the tide,” she says, “but I have held that they are a unique twist to an otherwise-boring tuxedo!”

Evan Ratner, an investment analyst, and Vinnie Buehler, an associate at a law firm, launched CalinY this summer. The brand uses interchangeable pieces so guys can match their bolo with their outfit. They call it the “Urbolo.” And yes, booze was involved.

“I am in my early 30s, and don’t feel I can pull off the Southwest look on a daily basis, so we created a bolo with an urban edge,” says Buehler. He recounts how the idea came together last summer over drinks at Manhattan’s Union Square, when he was listening to his friend, (now business partner) vent his frustration on the lack of neckwear options for men.

“We’ve noticed that people enjoy wearing them around their neck for more formal occasions,” adds Ratner, “but friends also have enjoyed loosening them up and wearing them with a tee.” Breaking the chains of the necktie monopoly, one bolo at a time — Cator Sparks, Bloomberg

Disney, SM reap fruits of partnership

By Cathy Rose A. Garcia, Associate Editor
NEARLY 5,000 Disney-branded products are sold every hour in SM shopping malls throughout the country, according to officials of The Walt Disney Company (Philippines), Inc. and SM Lifestyle and Entertainment, Inc.
In the last three years, Disney and SM have worked together, leveraging on the strengths of their brands to drive business growth for both companies.
“The main reason (for the partnership) was we wanted to establish SM as a key destination for Disney properties. We like to work with global brands like Disney, they’re the best licensor in the world. For us being the largest mall operator, the largest retailer in the Philippines, we also want to work with the best,” Myra Eugenia I. Moñozca, vice president for licensing and partnerships at SM Lifestyle Entertainment, told BusinessWorld in an Aug. 17 interview.
Disney-SM’s multiyear partnership covers theatrical promotions, retail and special activities. The two companies brought Disney, Marvel, Pixar, and Star Wars movies to life through retail and entertainment experiences at SM shopping malls throughout the Philippines.
Veronica Espinosa-Cabalinan, general manager of The Walt Disney Company (Philippines), noted the Disney brand has become stronger in the Philippines as a result of the partnership with SM.
“The partnership helped drive business growth for us. The data showed close to 5,000 Disney products are sold per hour in SM malls. Year on year, since the partnership, we have had double-digit growth in our Disney character business with SM Retail,” she told BusinessWorld at the Disney office in Taguig on Aug. 17.
“Two out of three Filipinos are Disney fans. With that fact and the quality products we have available in retail, it helps us build the connection with Filipino fans and audience,” she added.
Ms. Moñozca noted Disney now contributes approximately half of overall sales of character brands in SM. Also, Disney licensees in key categories such as apparel, accessories, footwear and toys have been able to generate 80% of their sales from SM stores.
DISNEY EXPERIENCE AT SM
SM malls have become a showcase for Disney films, as well as its well-loved characters. Last December, all 55 SM malls throughout the country featured Disney-themed Christmas displays under the “We Love Disney” campaign.
“The malls pride themselves in providing the best possible family experience for our customers every Christmastime. We know the nature of our Filipino customers. You can basically do everything at the mall now, go to mass, shop, eat, watch a movie… Having that thematic experience like We Love Disney campaign added to that excitement during Christmastime,” Ms. Moñozca said.
Ms. Cabalinan noted these displays, which featured Mickey and Friends, Disney Princesses and other popular characters, helped bring the Disney experience to more Filipinos.
“As you know, especially in the provinces, one of the aspirations of some Filipino families is to be able to go to Disneyland. Now this type of installation brings them close to that type of experience, one where they can also experience in Disneyland,” Ms. Cabalinan said.
More than a third of screen share for Disney films in the Philippines are accounted to SM cinemas, allowing the movies to reach audiences in Visayas and Mindanao wherever there are SM malls.
“Aside from driving business growth, it provided us increased engagement with fans, connecting to fans not just in Metro Manila. We have to build our strengths in the Tier 2 and Tier 3 cities, and that’s what the partnership is about also, reaching areas with fans that we are unable to connect with,” Ms. Cabalinan said.
With a slew of new movies coming out in the next few months, Disney and SM expect to continue bringing unique, “money can’t buy” experiences for fans at the malls.
“What’s exciting is Disney churns out new properties and movies every year, just based on theatrical slate for next year, there’s so much more we can do with theatrical promotions with Disney… We will support it on ground with activations, retail campaigns as well. With new movies comes greater opportunities to do something different year on year,” Ms. Moñozca said.

Orly launches nail care innovations

KEEPING ONE’S nails always manicured usually comes with the worry that the nails will get brittle and yellow — and growing out one’s nails to correct these problems would usually take a few months. But developments in nail care technology now address these concerns.

International nail care brand Orly has reintroduced its Orly Breathable Treatment + Color nail polish collection and launched the Orly GelFX Builder in a Bottle as part of its “Strength in Color” campaign.

The Orly Breathable Treatment + Color nail polish was first launched in 2017 to the professional market. It has been relaunched this year to the general public.

“We wanted to educate the general public on the innovative healthy benefits of Orly Breathable as we are promoting Orly as a safe option for the market as it is vegan, free of harmful chemicals, and an all-in-one healthy product (treatment and color in one),” wrote Frances Abayari, brand manager of Sprint Asia Logistics Inc., which is Orly’s official distributor, in an e-mail to BusinessWorld. 

The Orly Breathable Treatment + Color nail polish is made with a permeable formula which hydrates and promotes nail growth. It is also claimed to prevent chipping and peeling. It is Infused with argan oil, pro-vitamin B5, and vitamin C. No base coat and topcoat are necessary as it functions as an all-in-one product.

Its ingredients are also Halal Certified by the Islamic Society of Washington Area (ISWA).

The brand also introduced the Orly GelFX Builder in a Bottle, “a soak-off sculpting gel for nail extensions” as one of the latest innovations in the nail care industry.

Ms. Abayari described that it “applies like a soft gel, wears like a hard gel, and soaks-off when ready to remove.”

It instantly extends short nails and can be used to apply nail art. The Orly GelFX Builder in a Bottle is set for release in the Philippines by the fourth quarter.

Activities for the professional market and the public will also be held in line with the campaign.

“We have road shows nationwide promoting all product categories having all Orly services available in most salons. We have regular retail promotions to reach end consumers as well,” Ms. Abayari added.

Orly Products are available at Pure Beauty branches, ZALORA, Watsons, Landmark, Robinsons, Cash & Carry, ICM, PCX, Lazada, and BeautyMNL. Michelle Anne P. Soliman

Absolut Distillers sets P1.3-B expansion plan

By Victor V. Saulon, Sub-editor
ABSOLUT Distillers, Inc. (ADI) announced a P1.3-billion expansion plan for the next two to three years covering investments in at least 10 megawatts (MW) of renewable energy and a capacity increase for bioethanol production.
Gerardo T. Tee, ADI chief operating officer and head of distillery operations, said he would like the projects to be completed by 2021 or as soon as possible.
“I’d like to rush it by 2020 kung sabay-sabay namin gagawin (if we will do them all at the same time),” he told reporters during a tour of the company’s facility in Lian, Batangas on Friday.
“This is about Bong’s intention to further improve our renewable energy capacity,” he said, referring to Lucio “Bong” K. Tan, Jr., president and chief operating officer of Tanduay Distillers, Inc., the parent firm of ADI.
The renewable energy projects are broken down into a 3.5-MW biomass plant, a 3.5-MW waste-to-energy facility, and 3-MW of solar power projects to add to its existing 2-MW solar farm.
“Our priority is a P700-million investment in a mill that would include a 3.5-MW biomass plant,” Mr. Tee said.
Mr. Tee was referring to a sugarcane mill that will produce molasses, the raw material for bioethanol production. Its by-product, bagasse, can be used to generate energy. The mill will create another market for sugarcane farmers who supply to a lone mill in the area.
ADI is investing around P100 million for its bioethanol expansion that will increase production capacity to 150,000 liters from 115,000 liters per day.
The solar energy expansion — a combination of solar rooftop and ground-mounted solar panels — may be ramped up to as high as 5 MW, although 3 MW is ADI’s “threshold” as it approximates the facility’s energy consumption of around 3.5 MW, he said.
Mr. Tee placed the cost of the solar expansion at $1.3 million to $1.4 million per MW, or up to P350 million for 5 MW.
ADI’s existing bioethanol facility has a digester, an equipment that produces methane gas which is fed to its wastewater to metabolize bacteria and reduce pollution. The resulting organic waste has a potential for biogas that can be used to produce energy. A biogas waste-to-energy system is part of the expansion plan, Mr. Tee said.
“That’s another $3 million,” he said, converting the cost at P150 million in the local currency.
The ADI chief said the cane mill and the biomass facility should be completed by 2019, while the solar and waste-to-energy projects by 2020, at the earliest.
Mr. Tee expects financing for the projects to be sourced 70% from banks and 30% from internally generated funds.
“We have been acquiring land within our area of operations as we prepare to expand our investment in renewal energy,” he said.
The existing bioethanol facility stands on a 16-hectare property, while the expansion projects will be built on newly acquired land of around 24 hectares. ADI is negotiating to acquire more land in the area.

Product review: Orly Breathable Treatment + Color

AS A nail polish formulated as a one-step system, Orly Breathable Treatment + Color saves one the hassle of having to apply several coats of different polishes as it can be used as both base and top coat.

During the product launch in Pasig City on Aug. 8, BusinessWorld was given six colors — a variety of light to dark shades of pink and purple.

For a week, this writer tried Nail Superfood, a bright watermelon hue (which appeared orange under yellow lighting). To test its longevity, I applied two coats of the polish as is (with no base and top coat) on my left hand, while on my right, I applied a separate base and top coat along with two coats of the polish.

The color dried after 10 minutes.

I was impressed that the color did not smudge or get any lines after the first evening I had it on, unlike other brands I have used regardless of color.

By the middle of the week, I noticed that the polish on the tips of my left index and middle fingers began to chip off while the polish on my right hand remained sturdy. I did not perform any tedious task with my hands that would affect the polish longevity, except probably washing my socks daily after arriving home.

At the end of the week, I played a bit of classical guitar, alternating my left and right hand to strum on the strings. After 15 minutes, I checked my nails, but saw no changes.

When I finally removed the polish, the fingers on both hands did not look pale and it was not obvious that I just had nail polish on.

Overall, I have to say that it did not quite live up to my expectation of not needing to apply base and top coat, as I hoped that the polish would stay unchipped for two weeks.

For those who wish to try it for themselves, I would suggest applying three coats of polish and wear it for more than a week to see how long it can last without peeling or chipping off. — Michelle Anne P. Soliman

T-bill, T-bond rates seen sideways

RATES of Treasury bills and bonds will likely move sideways. — KARL ANGELO N. VIDAL

YIELDS ON government securities on offer this week will likely move sideways as demand is expected to pick up amid excess liquidity in the market as inflation expectations start to “taper off.”
The Bureau of the Treasury (BTr) is offering P15 billion worth of Treasury bills (T-bill) tomorrow. Broken down, the Treasury plans to raise P4 billion and P5 billion through the three-and six-month papers, respectively, and another P6 billion in one-year T-bills.
The government will also raise P15 billion via reissued three-year Treasury bonds (T-bond) with a remaining life of two years and five months on Wednesday.
Bond traders interviewed last week said rates on the T-bills on offer on Tuesday will likely move sideways from the previous auction.
The Treasury fully awarded the T-bills it auctioned off last week, borrowing P15 billion as planned versus total tenders totalling P43.1 billion.
At that auction, rates of the three-month, six-month and one-year papers declined to 3.203%, 4.064% and 4.869%, respectively.
On Friday, at the secondary market, yields on the 91-day, 182-day and 364-day papers ended at 3.65%, 4.0414% and 4.8301% respectively.
The trader added that the three-year bond auction on Wednesday could fetch a higher rate from the previous auction.
“For the T-bonds, the rate would be around 5.05% to 5.15%,” the trader said.
In May, the BTr made a full award of reissued three-year T-bonds, borrowing P10 billion out of the P19.424 billion tendered by investors.
The three-year papers fetched an average rate of 4.703%, up from the 4.632% fetched when the papers were sold in April.
“Our forecast is 4.9-5.1% as we see inflation expectations in the next few months is starting to taper off (lower),” another bond trader said in a text message.
At the secondary market on Friday, the three-year debt papers were quoted at 5.2946%.
The Bangko Sentral ng Pilipinas (BSP) said inflation will likely peak in August or September before eventually slowing down to the 2-4% target band by next year.
“Latest baseline forecasts have shifted higher over the policy horizon, suggesting that inflation will remain elevated in 2018 with the peak occurring sometime in the third quarter, and will revert to the inflation target of 2-4% in 2019,” BSP Governor Nestor A. Espenilla, Jr. said in a speech in Makati City on Aug. 14.
Last month, headline inflation accelerated to a multiyear high of 5.7%, averaging 4.5% as of end-July. Both prints are well above the higher end of the government’s target.
In response, the monetary authority fired off its strongest response in a decade, raising benchmark rates by 50 basis points earlier this month.
The trader added that the market is “still very liquid” due to the maturities the Treasury paid off recently.
The Treasury unleashed P91 billion into the financial system last week as it paid maturing debts.
The first trader noted that strong demand continues to be seen in the short end as rate hike expectations from the BSP as well as the US Federal Reserve were already priced in.
The US central bank’s Federal Open Market Committee opted to leave policy rates unchanged during its August meeting. However, the central bank is widely expected to tighten its benchmark rates next month.
In the minutes of the meeting, the participants generally expected further gradual hikes as many officials said it would likely “soon” be appropriate to raise benchmark rates.
The Treasury is raising P300 billion from the domestic market this quarter through auctions of securities, offering P195 billion in T-bills and another P105 billion in T-bonds.
The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product. — Karl Angelo N. Vidal

Coca-Cola FEMSA’s sale of PHL operations ‘credit positive’ — Moody’s

COCA-COLA FEMSA S.A.B. de C.V.’s decision to sell its stake in bottling operations in the Philippines has been deemed a credit positive by Moody’s Investors Service, as the proceeds are expected to be used to reduce the company’s debt.
Earlier this month, Coca-Cola FEMSA said it is selling its controlling stake in its Philippine unit, Coca-Cola FEMSA Philippines, to the Coca-Cola Co., which will take over operations via Bottling Investments Group (BIG).
Coca-Cola FEMSA estimated the transaction to yield an enterprise value of $700 million, in line with the $688.5 million it paid for the stake in 2013.
“Considering that the company will use at least part of the proceeds to reduce debt, the sale is credit positive for (Coca-Cola FEMSA) because it further supports its plan to de-lever. If (Coca-Cola FEMSA) fully uses the proceeds to reduce debt, the company’s adjusted total debt/ EBITDA would decline on a pro forma basis to 2.0x from 2.5x as of the end of June 2018,” Moody’s Investors Service said in an August 23 Credit Outlook report.
Last year, Coca-Cola FEMSA issued 10 billion Mexican pesos ($520 million) in local notes to pre-fund the $445 million maturity of a Yankee note slated mature in November 2018. Additional debt payments include $500 million due in February 2020 and $900 million due in November 2023, both of which relate to the Yankee bond.
“If (Coca-Cola FEMSA) does not use the proceeds to reduce leverage, at least partially, Moody’s-adjusted leverage will remain close to 2.4 times at year-end 2018 because of additional debt incurred to fund acquisitions in Guatemala and Uruguay,” Moody’s said.
“Also affecting (Coca-Cola FEMSA) credit metrics will be the sale of the Philippines operation and sharp depreciations of Brazil’s and Argentina’s currencies. Although leverage would be higher than our expectation, (Coca-Cola FEMSA’s) already-strong liquidity would be enhanced,” it added.
As of end-June 2018, the company’s cash on hand stood at 23.5 billion Mexican pesos ($1.2 billion) which covers two times its short-term debt.
Coca-Cola FEMSA’s exit from the Philippines is attributed to the excise tax on sweetened beverages implemented at the beginning of the year. The country imposed a P6 per liter tax on beverages with sugar or noncaloric sweeteners and a P12 per liter tax on drinks containing high fructose corn syrup.
“The Philippines’ strong economic growth, which has averaged 6% annually over the past 10 years, has allowed the demand for products subject to excise duties to be somewhat inelastic. However, the materiality of the change, coupled with the low purchasing power of the population (less than $3,000 GDP per capita), has severely affected (Coca-Cola’s) volumes and profitability,” Moody’s said.
The debt watcher noted Coca-Cola FEMSA’s output in the Philippines during the first six months of the year dropped 5.8% from a year ago while its operating income declined 44% year on year. The Philippines accounted for some 13% of its consolidated revenue and 7.5% of its earnings before interest, taxes and amortization (EBITA).
“Therefore, we estimate that on a pro forma basis, (Coca-Cola FEMSA’s) EBITA margins will improve to close to 15.2% from 13.8% for the last 12 months that ended in June 2018,” Moody’s said.
The debt watcher also flagged a “more adverse” business climate for the soft drinks companies, as more countries are imposing taxes on sugar-sweetened beverages. After the Philippines, the United Kingdom, Peru and Ecuador are also slapping taxes on soft drinks.
“This means that innovation and product diversity will remain key factors when assessing credit risk in this industry,” Moody’s said.
“Despite (Coca-Cola FEMSA’s) exit from the Philippines, management made clear that it will continue to pursue expansion opportunities, including in Asia, and we expect the company to do so prudently,” it added. — Janina C. Lim

Vegetable growers face challenges in meeting domestic demand

By Carmencita A. Carillo, Correspondent
DAVAO CITY — Vegetable farming could prove to be lucrative with the current domestic supply gap estimated at $3 million and the Asia-Pacific market expected to hit $3 billion in the next three years.
“There is a big market for vegetables now and in Asia Pacific alone it is expected to grow from a $2 billion market to a $3 billion market by 2021,” Department of Agriculture (DA) Undersecretary Jose Gabriel M. La Viña said in an interview during the National Vegetable Congress held in the city from Aug. 22-24.
But before looking at the export potential, Mr. La Viña said the agriculture sector should first address domestic demand.
“We are faced with the challenge of how to grow food faster and how to become self-sufficient, much less become exporters of vegetables,” he said.
The DA has rolled out programs to encourage farmers to plant high-value crops, use farm technology more intensively, and follow best practices.
“We train them to become entrepreneurs, we provide very low interest loans from 2% to 6% depending on the crops planted,” he said, noting that vegetable farmers can avail of P25,000 worth of financing.
Mr. La Viña said while individuals can qualify, the DA prefers lending to cooperatives to encourage farmers to organize themselves.
Under Republic Act 10848, which extended the period of implementation of the Agricultural Competitiveness Enhancement Fund (ACEF) to 2022 from 2015, farmers can access not only training programs but also opportunities to modernize and mechanize operations.
Up to 80% of the ACEF is for financing, providing up to P5 million per project for cooperatives and P1 million for small farmers.
The remaining 20% of the fund is for research and development grants.
CLIMATE-SMART
The Vegetable Industry Council of Southern Mindanao (VICSMin), Inc., which has been staging the yearly gathering of vegetable farmers since 2006, is also working to improve production.
VICSMin Vice President Rogelio G. Gualberto said the association hopes that this year’s congress will provide the sector further knowledge on modernization, food safety and techniques to adapt to changing weather conditions through climate-smart technology.
Raymundo R. Calugcugan, soil and plant nutrition consultant of Tagum City in Davao del Norte and head of R.R. Calugcugan Technology, was among those that presented a climate adaptation system that was piloted in Cauayan, Negros Occidental.
R.R. Calugcugan Technology — a research and technology provider and volunteer company tapping a network of researchers, innovators, agriculturists, pastors and lecturers — set out to train around 200 farmers in Cauayan in 2015 through the Department of Social Welfare and Development’s Sustainable Livelihood Program for 4Ps beneficiaries, the government’s cash transfer program.
The training involved a Precision Farming System, which uses the Rhizocote Micronutrient and Rhizocote Foliar Fertilizers.
“This was a hands-on training where the farmers were made to actually do the plowing, seeding, transplanting, fertilizing, weeding, pest and disease control, harvesting and even marketing,” said Mr. Calugcugan, who was named Most Outstanding Inventor of the Philippines in 1997 by the Department of Science and Technology and the Filipino Inventors Society, Inc.
Drought struck in February 2016, and the farmers were bracing for the worst, but their vegetable farms survived.
“These 200 farmers proved that sustainable farming is possible even during dry spells when their vegetable plants survived the drought,” said Mr. Calugcugan, also a 1997 WIPO Gold Medal Awardee of the World Intellectual Property Organization.
Mr. Calugcugan said the Cauayan experience has been replicated in other projects nationwide.

Travelon opens its first stand-alone store in the world in the Philippines

HAVING SEEN how its range of products fit Filipinos, innovative specialty travel products and accessories brand Travelon has decided to open its first stand-alone store in the world here in Manila.

Located at the third level of Building D of SM Megamall in Mandaluyong City, the Travelon store, which formally opened on Aug. 16, features a wide range of products that adhere to the brand’s mission and vision of “making travel easier and safer.”

Among the products on offer are its premium selection of cutting-edge, anti-theft bags that boast of Travelon’s anti-theft features like cut-proof straps, slash-proof fabrics, locking zippers and carabineers, and an RFID-blocking technology.

Established in 1978 by trailblazing outdoor sports entrepreneur Don Godshaw, Chicago-based Travelon has since become a global brand whose products — over 400 now — are available in approximately 60 countries including Brazil, Colombia, Canada, Ecuador, Germany, Guatemala, Mexico, Poland, South Africa, Spain, Singapore, the United Kingdom, Thailand, and the Philippines.

Travelon has been in the Philippines since September 2011, distributed by the Primer Group of Companies.

In a short chat with BusinessWorld during the store launch, Mr. Godshaw, who flew in to personally oversee the opening of the first Travelon store, said it was a combination of factors which led them to finally decide to open a standalone store here.

“We felt there was a market here for Travelon products. With traffic here forcing a lot of people to commute to go to their destinations, it is very reassuring to know that your valuables are safe inside secured bags like what we offer. This is apart from the fact that Filipinos, too, love to travel to different places, be it locally or abroad. You see, when thieves steal your things, they are also stealing memories so you really have to guard against that,” Mr. Godshaw said.

“As to the opening of the store, we saw that we had good local partners who believe in the brand and are making sure to have the products and what they are all about reach the consumers,” he added.

Mr. Godshaw went on to say that they are also considering opening additional stores if the conditions permit as well offering new products.

Aside from the standalone store, Travelon bags are available at The Travel Club, R.O.X., Flight 001, and Grind stores; SM Department Stores, Robinsons Department Stores, Landmark Department Stores, and Duty Free Philippines.

It also has social media accounts — TravelonPhilippines on Facebook and Travelonph on Instagram — where one can check out its products. — Michael Angelo S. Murillo

CitySavings Bank sees softer 2018 loan growth

CITYSAVINGS Bank, Inc. expects its loan growth to ease this year.

CITYSAVINGS BANK, Inc., the thrift banking arm of UnionBank of the Philippines, expects its lending to ease this year due to the issues on credit for teachers, even as it sees a recovery in the second half of the year.
UnionBank President and Chief Executive Officer Edwin B. Bautista told reporters on Thursday that the savings lender is expecting its loan growth to soften this year as it was unable to book salary loans for public school teachers in the first semester.
“If we end the year flat, we’ll be happy because that means we regained what we lost. Ang lalim ‘nung six months na wala kaming booking (The effect of the six months of not booking loans ran deep),” Mr. Bautista said in an event in Makati City on Thursday.
He added that the bank’s lending book in the January-June period was lower than the previous semester due to its inability to grant salary loans to teachers, which comprise the bulk of its loan book.
Earlier this year, the Department of Education suspended its Automatic Payroll Deduction System for loans and insurance payments until June as it worked on new guidelines, making lenders unable to issue credit for teachers.
Despite this, Mr. Bautista said CitySavings is hopeful to recover the lost credit bookings in the July-December period due to pent-up demand.
“[Our full-year loan growth] depends on how fast we will grow in the second half of the year whether the volume can recover or not. Hopefully it would,” the chief executive of the Aboitiz-led bank said.
“I think the pent-up demand is there so the growth will be fast for the rest of the year.”
Last year, gross loans of CitySavings grew 8.2% to P66.91 billion from the P61.86 billion logged in the same period in 2016.
PR SAVINGS
Meanwhile, Mr. Bautista said the acquisition of CitySavings of Philippine Resources Savings Bank Corp. (PR Savings) is seen to be finalized in the fourth quarter.
“We’re just waiting for the final approval on PR Savings. I think by the fourth quarter, we should be able to consolidate or merge that already.”
In January, UnionBank’s savings lender signed a share purchase agreement with the Ropali Group to fully acquire PR Savings.
The Isabela-based lender is focused on motorcycle, agri-machinery and teachers’ salary loans, serving over 131,000 borrowers, mostly from the mass market segments.
PR Savings is part of the Ropali Group of Companies, a mid-sized conglomerate with focus on motorcycles and agricultural machinery. — Karl Angelo N. Vidal

PT&T says in talks with foreign investors

By Denise A. Valdez
THE Philippine Telegraph and Telephone Corp. (PT&T) is hopeful it can secure a foreign investor to boost its bid for the third telecommunications player slot.
PT&T chief executive officer James G. Velasquez said the company is now in advanced discussions with potential foreign partners.
“My view is the foreign partner will come in once the new major player is announced. A lot of them are waiting in the wings, and whoever wins, they’d partner with that company. But we’re already talking to some of them,” he told reporters last Thursday.
He noted the capital expenditure required to participate in the third telco auction will “not necessarily” come from a foreign investor.
“There are many ways of funding capex (capital expenditure). Some of that could be converted to opex (operational expenditure) under a managed service agreement,” Mr. Velasquez said.
Under the government’s draft terms of reference (ToR) on the selection of a third telco player, a participating company’s combined capex and opex must be at least P40 billion and at most P130 billion.
Mr. Velasquez said the company is planning to re-list its shares on the Philippine Stock Exchange, as a way to raise funds.
“We went for voluntary suspension, but we’re planning re-list, because we’d like to have access to the capital markets as well,” he added.
PT&T is looking to exit its court-assisted rehabilitation to resume operations and raise additional capital for its expansion plans. Earlier this month, a Makati Regional Trial Court (RTC) granted its petition “subject to compliance with certain requirements in line with the approved rehabilitation plan.”
The Department of Information and Communications Technology (DICT) is eager to name the third telco player before the year ends, noting it has a direct order from President Rodrigo R. Duterte.
DICT Acting Secretary Eliseo M. Rio, Jr. told reporters on Thursday it would not accede to some companies’ demand for more time, if there are about three to four companies that are ready to bid.
“If there are companies ready to compete with Globe (Telecommunications, Inc.) and Smart (Communications, Inc.), why not go ahead? Why should we wait for others? Maybe those who did their homework are more serious than those who are coming in late,” he said.
As for PT&T, Mr. Velasquez said it has been preparing since early this year to participate in the government’s auction.
“We have been preparing to bid as early as maybe six months ago. I think we’re just waiting for all of these to move forward. We’re ready to submit our proposal,” he said.

Coffee exporters struggle to find ships for Brazil bumper crop

SAO PAULO/NEW YORK — Brazilian coffee exporters are struggling to find shipping capacity to transport a bumper crop from the world’s top producer, which could result in supply delays to roasters worldwide.
Abundant overall supplies in consuming countries, however, will limit any near-term impact from shipping delays of Brazil’s new crop and are not yet seen impacting coffee prices that are 12-year lows.
Farmers in Brazil are finishing what the government and industry expect to amount to a record coffee crop of around 60 million 60-kg bags compared with 45 million bags last year.
Container ships do not have the capacity to immediately take the huge volume of beans that are arriving at top exporting ports such as Santos and Rio de Janeiro, importers and exporters said.
That means exporters, which typically book capacity on container ships one or two weeks in advance, have a wait of up to eight weeks, they say.
For Unique Coffee Roasters, a mid-sized roaster on New York’s Staten Island, new-crop shipments from Brazil scheduled to arrive in early September have been postponed to October due to shipping delays, said Joseph Ferrara, director of the company’s Coffee and Operations department.
“It’s happening to everyone. It’s not something (importers) can really control,” said Ferrara, adding the roaster has enough inventory to wait out the delay.
The shipping delays come after US coffee imports from Brazil fell 6.6 percent in the first half of 2018 to a six-year low, US International Trade Commission data showed.
“There is less availability of liners, of ships,” said Rodrigo Costa, director of trading for Comexim USA.
“Usually it will take a week at most to get a new booking. Now sometimes it’s taking three to four weeks.”
One US importer cited eight-week delays coupled with a 10 percent price hike.
Brazil’s coffee exporters association Cecafé said in its latest monthly report that July shipments, which were up 28 percent from a year prior, could have been even bigger if not for “difficulties at ports.”
This comes after Brazil, Latin America’s largest economy, suffered its deepest recession on record in 2017, which reduced its imports and consequently cut the availability of containers available to be used for exports, importers and exporters said.
Only commodities that are transported in containers have been impacted by reduced shipping space, traders said. Grains and sugar, which are largely transported in bulk carriers that transport unpackaged cargo, are not facing the same waiting time, exporters and importers said.
Coffee, on the other hand, is shipped in containers, and its transportation pinch is being felt now as Brazil harvests and ships its large 2018/19 crop.
It was not clear if container ship availability will improve in the future as the country’s economy remains sluggish and its imports remain low.
And while Brazilian coffee sales reached 38 percent of production by Aug. 7, which was up from 34 percent at the same time a year ago according to Safras & Mercado data, arabica coffee prices have since tumbled to 12-year lows below $1 per lb on pressure from the weak Brazilian currency.
The low price was expected to reduce farmer selling, which could help ease the shipping logjam, though any price rebound would increase sales and the country’s coffee flow in coming months, one of the largest Brazilian exporters said.
For now, the bottleneck is exacerbated by this year’s enormous crop, the exporter said, adding it cannot find extra space beyond a previous agreed allocation with ship owners.
“We have a volume ‘x’. The liner will deliver that volume, but if we need additional cargo space, they already said they don’t have it,” the exporter said, asking not to be named because the company did not want to speak publicly about the issue. — Reuters