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Yields on term deposits go up

YIELDS fetched on term deposits climbed anew this week as the central bank reduced the amounts offered during Wednesday’s auction.
Demand for the short-term placements softened to P81.663 billion, sustaining a downtrend from the P100.813 billion in bids received a week ago but still higher than the adjusted P70-billion offering for the term deposit facility (TDF).
Appetite eased across the three tenors on Wednesday, accompanied by higher returns sought by banks.
The seven-day tenor saw the biggest decline in bids from market players, which came ahead of the long weekend for All Saints’ Day and All Souls’ Day.
The week-long deposits shored up P44.325 billion in offers, down from P53.642 billion last week although still higher than the P40 billion the Bangko Sentral ng Pilipinas (BSP) wanted to sell. In turn, rates sought by banks rose to average 4.7249% compared to 4.7196% a week ago.
The 14-day papers also saw softer demand worth P23.425 billion, above the P20 billion on the auction block but down from last week’s P28.506 billion. Players pushed rates higher to average 4.7631%, coming from a narrow range of 4.7-4.8% and up from 4.7553% previously.
Tenders for the 28-day instruments also eased this week, going down to P13.913 billion from P18.665 billion received a week ago. This matched a reduction in the offer amount to P10 billion from P20 billion during the Oct. 24 exercise.
As a result, the average yield climbed to 4.8798%, hovering close to the 5% ceiling rate set by the central bank. Banks asked for rates ranging from 4.8-4.938%, which led to an average that is higher than the 4.8493% fetched last week.
The TDF has been the central bank’s primary instrument to capture excess money supply and influence short-term rates in the financial system. Through the weekly auctions, the BSP can bring market and interbank closer to its desired range by setting the standard for short-term instruments using the margins that they pay to banks for these placements.
Higher TDF placements prod banks to also raise interest rate margins for their products, benchmarked on the 4-5% interest rate corridor of the central bank.
For next week, the central bank is hiking its total offer under the term deposit facility to P100 billion — P50 billion for the seven-day tenor, P30 billion for the 14-day instruments, and P20 billion for the 28-day deposits. — Melissa Luz T. Lopez

Robinsons Bank to raise P3.5B via LTNCDs

By Karl Angelo N. Vidal
Reporter
ROBINSONS BANK Corp. is set to raise P3.5 billion through issuance of long-term negotiable certificates of deposit (LTNCD) next year to fund the expected growth of its lending segment.
In a text message, Robinsons Bank President and Chief Executive Officer Elfren Antonio S. Sarte said the Gokongwei-led bank is set to offer LTNCDs with an issue size of P3.5 billion.
The long-term notes will be offered in the first half of the year, which will constitute the second tranche of its P5-billion LTNCD program approved by the central bank.
Mr. Sarte added that the proceeds of the fundraising activity will be used “to fund the expected growth of our lending business.”
In the first half of the year, the commercial bank saw its net profit surge to P201.8 million, up 33.9% from the same period last year.
This was driven by the expansion of its loan book, which grew 43.5% to P59.7 billion year-on-year.
In July, the bank raised P1.78 billion from the first tranche of its long-term notes program, which will mature in 5.5 years and carry an interest rate of 4.875% to be paid quarterly.
Like regular time deposit offered by banks, LTNCDs offer higher interest rates. However, LTNCDs cannot be pre-terminated but can be sold on the secondary market, making them “negotiable.”
A number of banks have been raising additional capital ahead of tighter requirements from the central bank under the international Basel 3 standards, which will take effect next year.
Other lenders such as Philippine Bank of Communications, Metropolitan Bank & Trust Co. and Rizal Commercial Banking Corp. also offered LTNCDs recently to support their funding needs.
Robinsons Bank is licensed as a commercial lender and is the 19th biggest in the industry in asset terms as of end-June.
The lender is looking to scale up to be a universal bank and eventually go public.

China loan for Subic-Clark rail may not be ready by Xi visit

THE Department of Transportation (DoTr) said a commercial agreement with China for the Subic-Clark Railway may not be ready for signing when Chinese President Xi Jinping visits next month.
The DoTr said it has yet to receive a shortlist of turnkey contractors to which the Philippines will issue its request for proposals.
“As soon as we receive it, everything will be ready, including bid documents, and the joint bids and awards committee with the BCDA (Bases Conversion and Development Authority) has been organized,” DoTr Undersecretary for Railways Timothy John R. Batan said in a briefing on Wednesday.
He said the target is to have the agreement signed within the year or early next year with construction starting immediately after.
Mr. Batan noted that Mr. Xi is expected to sign in November the loan agreement for the Philippine National Railways (PNR) South Long-Haul Project, which will extend the train line to Bicol.
The loan scheduled for signing in November will fund the hiring of the PNR South Long Haul project management consultant, the services of which were initially procured this month, he added.
Mr. Batan told reporters after the briefing that the project management consultancy for PNR Bicol is worth P14 billion, with other components of the project expected to be finalized and awarded by the first quarter of 2019
He said the consultancy loan currently represents “roughly 70% to 80% of the contract price.”
On the Subic-Clark Railway project, Transportation Secretary Arthur P. Tugade said the Philippines needs to wait for the pool of nominees from the Chinese government, because it is a China-funded project.
“When a project is Chinese-funded, those who want to be involved must come from a list of nominees for accreditation from the Chinese government. We’re now at the stage where we are waiting for the nominated consultants for the feasibility study. When they finish the list of three nominees, we will do a bidding. The winner will do the feasibility study and come up with the data and details for the engagement,” he said.
Mr. Tugade also said he believes time is still sufficient to meet the 2021 timetable for completing the Subic-Clark Railway.
The Subic-Clark Railway Project is a P50.03-billion, 71.13-kilometer project approved by the National Economic and Development Authority (NEDA) Board in April. The PNR South Long Haul is a P151-billion, 581-kilometer railway that is expected to be partially open in 2022.
Both projects were presented for China loan financing when senior government officials visited that country in August. — Denise A. Valdez

Peso climbs to two-month high

THE PESO strengthened against the dollar to reach a two-month high as market players prepare for remittance coverage for the long weekend.
The peso ended the shortened trading week at P53.535 versus the greenback on Wednesday, slightly stronger than the P53.59 finish on Tuesday.
This was the peso’s best showing in nearly two months or since it ended at P53.46 on Sept. 3.
The peso traded stronger the whole day, opening the session at P53.55 a dollar. It climbed to as high as P53.50, while its intraday low stood at P53.58 versus the US currency.
Foreign exchange traders said the peso climbed even as it traded within a tight range.
“We saw agent banks bid around the P53.50 level, so it provided liquidity for the market ahead of the anticipated remittances for the long weekend,” the trader said in a phone interview.
“Market players were looking at the inflation figure to peak probably in the fourth quarter,” a second trader added.
The central bank earlier indicated that inflation has likely peaked in the third quarter of the year and is expected to begin moderating.
“Due to this, some players lightened up their long dollar positions,” the second trader noted.
The trader also suspected possible flows during Wednesday trading, which supported the peso.
“Probably, the flows were for the secondary offer of [San Miguel Corp.] That’s possible.” — K.A.N. Vidal

Bulacan airport must attract airlines without gov’t aid — Diokno

THE GOVERNMENT will take no action to ensure that airlines will operate out of the proposed Bulacan International Airport, signalling that the project needs to convince carriers to transfer to the new facility on its own commercial merits.
The government, through the Department of Transportation, is currently negotiating the concession contract with the project’s original proponent, San Miguel Corp. (SMC).
Budget Secretary Benjamin E. Diokno said that in keeping with policy, there will be no government guarantees in airport projects.
“Our condition is very clear that there will be no commitment on the part of the government to transfer flights from Clark or NAIA (Ninoy Aquino International Airport) to Bulacan. They have to compete to make the airport better, more attractive so that airline companies will voluntarily relocate to Bulacan,” Mr. Diokno said in a briefing on Wednesday.
The National Economic and Development Authority (NEDA) Board approved SMC’s unsolicited proposal for a P735-billion airport in Bulacan in April. However it is still subject for another round of evaluation for questions on its financial viability, after the concession terms have been formed.
The project involves the construction, operation, and maintenance of a 2,500-hectare airport in Bulakan, Bulacan, that includes an 8.4-kilometer airport toll road. The airport’s capacity is estimated at 100 million passengers a year.
Since the project is an unsolicited proposal, it needs to undergo a Swiss challenge under which other parties can make counter-offers which the original proponent has the right to match.
Mr. Diokno said that the government is currently fast-tracking the construction and rehabilitation of 28 airport projects in total.
“In line with the administration’s ambitious ‘Build, Build, Build’ program, 28 airport projects for construction,rehabilitation,upgrade are listed in the Department of Transportation’s (DOTr) priority agenda. Of the 28, three international airport projects — Lal-Lo, Puerto Princesa, and Mactan-Cebu — and four domestic airport projects — Tuguegarao, Calbayog, Ozamis, and Naga — have already been finished,” he said.
He noted that the Clark International Airport expansion project is expected to be completed in June 2020.
“These projects are projected to upgrade the country’s aviation industry, and will ensure greater regional accessibility. In the long run, this will propel sustained economic growth through the improved and more convenient movement of people and products, and generate quality jobs for Filipinos,” said Mr. Diokno.
He also said that 20 out of 42 airports nationwide have been rated to accommodate evening flights.
He said that the government aims to finish the construction, rehabilitation, and night-rating of airports before 2022.
“All the (airport) projects there will be finished within our term. We have a program of doing all within the President’s term,” Mr. Diokno said. — Elijah Joseph C. Tubayan

House bill filed to increase gov’t power to redistribute spectrum

A BILL amending Republic Act 7925, or the Philippine Competition Act, intended to ease entry of more telecommunication companies by increasing the government’s powers to allocate radio frequency, has been filed at the House of Representatives.
House Bill no. 8134, written by Quirino Rep. Dakila Carlo E. Cua, also seeks to impose punitive spectrum user fees (SUFs) on telecommunications firms underutilizing their frequency assets.
“Here in the Philippines, majority of the frequencies are assigned to two players and the companies under their control. They have been granted more than enough frequency but have failed to provide satisfactory service to Filipinos,” Mr. Cua said in a statement, Wednesday.
He said that a new entrant will need the frequency from various bands to provide competitive services.
The bill proposes to authorize the National Telecommunications Commission (NTC) to claw back or recall assigned spectrum that was left unused or underutilized.
The legislator also proposed a P2-billion appropriation for the NTC to upgrade its ability to measure frequency usage.
Entities holding licensed frequencies will also be charged double the SUF on assigned frequency that were left unused or underutilized.
The measures is intended to deter entities from “hoarding” frequency.
“By breaking the control of the two players over the country’s frequencies, we increase competition and welcome new players. We expect that this will result in improved service quality, faster Internet speeds and lower prices,” Mr. Cua said. — Charmaine A. Tadalan

Manila rated 95th in 100-city sustainability study

MANILA ranked 95th out of 100 global cities in the 2018 Sustainable Cities Index (SCI) compiled by design and consultancy firm Arcadis, beating out only Hanoi and Kolkata among the Asian metropolises evaluated.
Three Asian cities — Singapore, Hong Kong, and Seoul — made it to the global Top 20, at fourth, ninth and 13th respectively. London ranked number one in the 2018 study, followed by Stockholm and Edinburgh.
The index measures various factors such as social mobility and quality of opportunity and life; management of energy use, pollution and emissions; and also assesses the business environment and economic performance.
Arcadis, which apparently evaluated the Metro Manila region and not, strictly speaking, the city of Manila, said the Philippine capital needs to focus on building resiliency and investment in infrastructure to ease congestion.
“Infrastructure development is accelerating in Manila, providing much needed expansion to support the future requirements of the rapid urbanizing city. With so much advancement in construction innovation technology in recent years, Manila is poised to develop solutions that are resilient to future risks while remaining cost effective,” Arcadis Philippines Country Head Ross McKenzie said.
The SCI identified Manila as a typical Evolutionary City, characterized by rapid growth and subject to disruption along its evolutionary path that has the potential to affect jobs, crime levels and mobility choices.
According to SCI, the foundations of city sustainability are an educated and healthy work force, effective low-carbon infrastructure, and ease of doing business.
The cities at the bottom five of the rankings were Nairobi (96th), Cape Town (97th), Hanoi (98th), Cairo (99th), and Kolkata (100th). — Reicelene Joy N. Ignacio

Converge ICT, AMA buy 3rd telco bid documents

By Denise A. Valdez
Reporter
TWO more companies have solidified their interest in participating in the government’s bid for a new major telecommunications player, the National Telecommunications Commission (NTC) said on Wednesday.
In a text message, an NTC spokesperson said Converge ICT Solutions, Inc. and AMA Telecommunication Corp. have bought the selection documents for the bidding happening next week.
“AMA Telecommunication Corp. just purchased Selection Documents. Converge was one of the unidentified buyers last week. Mr. Dennis Uy’s presence in the office today made it public that it was Converge who actually purchased the document,” it said.
Acting Secretary of the Department of Information and Communications Technology (DICT) Eliseo M. Rio, Jr. previously told reporters Converge ICT led by Pampanga-based businessman Dennis Anthony H. Uy was joining the bidding with foreign partner KT Corp. from South Korea.
AMA Telecommunication Corp., meanwhile, has no digital footprint that would detail its company identity. Only a certain “AMA Telecommunications, Inc.” could be found online, which was given a congressional franchise in July 2016.
The latest update brings the total number of expected participants in the third telco search on Wednesday to 10, comprised of a mix of foreign and local companies.
Prior to Converge ICT and AMA Telecommunication, other local companies that have bought selection documents are Davao businessman Dennis A. Uy’s Udenna Corp.; Mel V. Verlade’s Now Corp. affiliate Now Telecom Co., Inc.; a consortium led by TierOne Communications International, Inc. and Luis “Chavit” C. Singson’s LCS Group of Companies; Philippine Telegraph and Telephone Corp. (PT&T); and one undisclosed company.
Among the foreign participants are Norway’s Telenor Group, China’s China Telecom Corp. Ltd. and Austria’s Mobiltel Holding GmbH.
At stake for the winning bidder is a certificate of public convenience and necessity (CPCN) valid for 15 years or the length of the franchise of a bidder, whichever is shorter; and radio frequency bands of 700 megahertz (MHz), 2100 MHz, 2000 MHz, 2.5 gigahertz (GHz), 3.3 GHz and 3.5 GHz.
The government said it will award the third telco player before Christmas.

EO establishes council to oversee Mindanao barter

PRESIDENT Rodrigo R. Duterte has issued an executive order (EO) regulating the barter trade in Mindanao, in part to “strengthen trade and commerce between and among the member states of the Brunei Darussalam-Indonesia-Malaysia-Philippines-East ASEAN Growth Area (BIMP-EAGA).”
Signed on Oct. 29, Executive Order No. 64 noted that the ancient commercial practice in Mindanao “continues to thrive and evolve as living tradition until the present day.”
The President’s order also said the decision to regulate barter is “consistent” with the administration’s 10-point socioeconomic agenda because it “will not only create jobs and business opportunities, but also strengthen trade and commerce between and among the member states of the BIMP-EAGA.”
To implement the order, the Mindanao Barter Council (MBC) is “established to supervise, coordinate, and harmonize policies, programs and activities on barter” in Mindanao.
The agency, the EO said, “shall be attached to the Department of Trade and Industry (DTI) for policy and program coordination,” and the DTI’s secretary shall chair the MBC.
Meanwhile, the heads of Mindanao Development Authority (MinDA) and Bureau of Customs (BoC) will serve as vice-chairs. Members will include representatives from the Departments of Finance (DoF), Foreign Affairs (DFA), and Agriculture (DA), of a rank not lower than assistant secretary. Also represented are the DTI- Muslim Mindanao, Maritime Industry Authority (MARINA), Philippine Coast Guard (PCG), and Philippine Ports Authority (PPA).
The MBC’s principal office will be established in Jolo, Sulu “as may be necessary and practicable.”
The order designates barter ports for the entry of goods intended for barter including the ports of Siasi and Jolo in Sulu, and Bongao in Tawi-Tawi.
“Products enjoying tariff protections and/or quantitative restrictions such as rice, corn, and sugar, as well as products requiring special import permits and/or subject to standard requirements, shall remain to be regulated by applicable laws, rules, and regulations,” it added.
The EO noted as well that national and local tax laws are applicable to “all goods imported under this order whose valuation, as determined by appropriate authorities, exceed the de minimis value of P10,000, or in such threshold amount as may be adjusted by the Secretary of Finance.” — Arjay L. Balinbin

Ramos family to exit Vulcan

VULCAN Industrial & Mining Corp. said Zap Cove Development Corp. will be subscribing to around three billion shares in the company, in a potential backdoor listing move.
In a disclosure to the stock exchange on Wednesday, Vulcan said its board of directors approved in a special meeting the subscription of Zap Cove to up to 2.55 billion shares in the firm out of its authorized but unsubscribed capital stock with a par value of P1 each.
Zap Cove was also granted the subscription rights to over 486.96 million shares partially paid shares held by National Book Store, Inc. (NBS). It will likewise assume NBS’ obligation for the unpaid subscription price on the shares.
With the share subscription by Zap Cove, Vulcan said it will cease to “engage in the business of mining, oil, petroleum, industrial development, and mineral processing.
The company requested for a voluntary trading suspension earlier in the day prior to the conduct of its board’s special meeting, saying they will discuss material information that will affect the future of its businesses.
The Philippine Stock Exchange approved the company’s request, suspending the trading of its shares from today (Oct. 31) until the market opens on Nov. 5.
“The trading suspension will enable the Company to provide its shareholders and the investing public with equal opportunity to (a) examine the details of the results of the Board meeting, and (b) fully appraise their investment position in VUL shares in light of such results,” the company said.
Shares in the company last traded at P2.49 each on Tuesday.
Incorporated in 1953 originally as Vulcan Manufacturing Corp., the company engages in finding, developing, and producing oil and gas reserves and other mineral properties.
The company is owned by the Ramos family, which also leads Atlas Consolidated Mining and Development Corp. and NBS.
NBS previously planned to use Vulcan as the backdoor listing vehicle for its retail assets, but decided to no longer pursue the exercise in 2017. The company however, said it will explore alternative strategies to “generate the most value to its shareholders.”
With no revenue-generating activities under its portfolio, Vulcan widened its attributable loss to P1.57 million in the first nine months of 2018, versus P1.46 million in the same period a year ago. — Arra B. Francia

EDC completes tender offer

By Arra B. Francia
Reporter
ENERGY Development Corp. (EDC) has completed its tender offer for its planned exit from the Philippine Stock Exchange (PSE).
In a disclosure to the stock exchange on Wednesday, the Lopez-led company said shareholders holding a total of 2.01 billion common shares accepted the tender offer priced at P7.25 apiece. The enter tender offer size was 2.04 billion common shares.
The offer ran from Sept. 25 to Oct. 22.
Once the shares are crossed from the PSE on Nov. 5, the number of EDC shares held by the public will fall to 0.16%.
Prior to the tender offer, the Philippine Renewable Energy Holding Corp. (PREHC) also acquired 8.9 billion common shares in EDC in September 2017.
The buyback of shares from the public forms part of the company’s plan to voluntarily delist from the stock exchange. The company said this will help them pursue a corporate strategy that would require greater flexibility over factors such as its dividend policy and leverage. The delisting is also seen to support EDC’s long-term growth.
With the completion of the tender offer, the company will now require approval from the PSE on whether it has met the conditions to proceed with its delisting.
EDC is scheduled to delist from the PSE by Nov. 29.
The company is the country’s largest renewable energy producer, with a capacity of 1,472 megawatts (MW) from hydro, solar, and wind power apart from geothermal. It operates the 150-MW Burgos wind farm, the biggest in the country.
It also holds nearly 1,200-MW of geothermal capacity, which accounts for 61% of the country’s total installed geothermal capacity.
EDC’s parent firm First Gen Corp. has 3,490-MW under its portfolio, generating 21% of the country’s gross generation capacity.
The company saw its attributable profit drop by 27% to P3.37 billion in the first six months of 2018, amid flat gross revenues at P17.14 billion.

Budget release rate hits 96% in late October

THE DEPARTMENT of Budget and Management (DBM) has released 96% of the 2018 budget to government agencies and local government units as of Oct. 25, outpacing the rate of release from the equivalent period in 2017.
Budget Secretary Benjamin E. Diokno said that the DBM has released P2.220 trillion of the P3.767-trillion budget so far this year, with the 96% release rate improving on the 90.1% from a year earlier.
Allotment releases are issued by the DBM to enable agencies to incur obligations to finance the delivery of public services.
“We are in the fourth quarter of the year so we will secure the swift release of funds as authorized by the General Appropriations Act (GAA)… we have maintained the quick yet prudent pace of budget releases,” Mr. Diokno said in a briefing on Wednesday.
Mr. Diokno said the major releases in October include P34 billion to the Department of Public Works and Highways for the implementation of the Basic Education Facilities Program, the P1.1-billion subsidy to the Land Bank of the Philippines for the public utility vehicle modernization program, and P6.7 billion for pension differential arrears of the Armed Forces of the Philippines.
Amounts tapped from Special Purpose Funds (SPFs), or lump sump funds for specific programs and projects that have not been identified in the budget preparation phase, have totaled P397.1 billion, or 80% of the SPFs in the 2018 budget.
“Most releases have come from the Budgetary Support to Government Corporations, the Miscellaneous Personnel Benefits Fund, the Pension and Gratuity Fund (PGF), and the National Disaster Risk Reduction and Management Fund (NDRRMF),” Mr. Diokno said.
Some P965.4 billion, or 98% of the Automatic Appropriations has also been released as of Oct. 25. The P522.7-billion Internal Revenue Allotment for local government units has also been fully released.
Other Automatic Appropriations include interest payments, retirement and life insurance premiums of government personnel. — Elijah Joseph C. Tubayan

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