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Liquidity growth slowest in nearly three years

By Melissa Luz T. Lopez
Senior Reporter
MONEY SUPPLY growth eased anew in September to post its slowest pace in almost three years, the central bank said, as bank lending also cooled at a time of higher interest rates.
Domestic liquidity or M3, the broadest measure of money in an economy, expanded by 9.7% year-on-year, slower than the 10.4% pace logged in August, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday. By face value, money supply totalled P11.2 trillion.
This is the slowest M3 growth logged since December 2015, and is the first time in nearly three years that the increase was in the single-digit level. Month on month, money supply rose by a modest 0.1%.
Funds from local sources grew by 14.5% that month, decelerating from a 15% increase posted in August as loans to the private sector eased, the central bank said in a statement.
Meanwhile, net claims on the government went up faster at 11% from 8.7% the previous month. This reflected increased borrowings made by the national government.
Net foreign assets in peso terms even dropped by 0.7% from a year ago, milder compared to a 1.3% contraction posted in August to reflect lower gross international reserves maintained by the BSP.
Dollar reserves dropped to a seven-year low of $75.161 billion in September due to lower gold valuations and as the BSP used the stash to defend the currency during the daily peso-dollar trading.
Meanwhile, foreign assets maintained by banks picked up due to higher loans as well as investments in debt papers, the central bank added.
The BSP introduced back-to-back rate increases worth 50 basis points (bp) each during their August and September meetings in order to rein in inflation expectations. This brought the key policy rate to 4.5%, the highest level in nearly a decade.
Despite the slower increase, the central bank said that overall liquidity conditions “remain supportive of the country’s growth requirements,” with economic managers targeting faster growth during the second semester in order to realize the downward-revised 6.5-6.9% target for 2018.
LENDING GROWTH PALES
Growth in approved credit lines also eased in September to mark its slowest pace in nearly two years.
Bank lending went up by 17.4% during the month, still robust but slower than the 18.9% increase in August. If reverse repurchase deals are included, total loans were 16.3% higher versus an 18.4% climb the month prior.
This is the slowest growth logged since December 2016, where bank lending posted a 17.3% increase.
Bulk of the loans were extended for production activities, which surged by 17.2% from a year ago versus the previous month’s 19.1% spike.
Lending to the construction sector continued to see the biggest rise at 36.4%, just as the government’s aggressive infrastructure spending push picks up pace.
Other industries which received additional funding are financial and insurance activities (31.4%); wholesale and retail trade, repair of motor vehicles and motorcycles (22.5%); manufacturing (20.6%); and real estate (15.8%).
Meanwhile, lending for administrative and support services activities was halved, while credit lines for other community, social and personal activities and professional, scientific and technical
activities went down by 12% and 11%, respectively.
Reversing the trend is consumer lending, which posted a faster 17.9% growth in September versus 15.8% a month ago. This came amid higher auto, credit card and salary-based loans which offset declines in other types of household borrowings.
The central bank said they will remain watchful over credit and liquidity growth to ensure price and financial stability.

Initial rice import shipments of 47,000 MT arriving by Dec. 1

THE 47,000 metric tons (MT) of rice awarded to bidders in the latest import auction will arrive by Dec. 1, Agriculture Secretary Emmanuel F. Piñol said.
The 47,000 MT shipment represents the volume awarded to bidders at the auction for the first batch of 250,000 MT out of 750,000 MT authorized for import this year by the National Food Authority (NFA) Council.
The government failed to make a full award of the volume authorized because many bids failed to meet the posted reference prices.
“The first arrival will be the volume bid out under the G2P (government-to-private) arrangement of 47,000 (MT). [NFA Officer-in-Charge] Tom Escares said deliveries are expected between Nov. 15 and Nov. 30,” Mr. Piñol told reporters.
He said the new auction for the unawarded 203,000 MT is scheduled for Nov. 6. Volumes awarded at that re-bid will arrive “between Nov. 30 and Dec. 16.”
He added that shipments from the remaining 500,000 MT will be arriving starting the end of 2018 until February, in time for the lean months.
“We will have enough buffer stock,” Mr. Piñol added.
The 203,000 MT will be imported through government-to-government (G2G) agreement.
“By the end of 2018, the expected buffer stock is 134 days… or over four months’ demand,” he said, adding that the calculation includes rice held by households.
He added that the Department of Trade and Industry plans to oversee the import of a further 80,000 MT.
The DA, along with the DTI and NFA, have implemented a suggested retail price (SRP) scheme covering well-milled, regular-milled and premium rice.
“There are fears it might affect the prices of palay (domestically-grown unhusked rice) but you have to understand that the NFA is ready to procure… We would prefer if traders not corner the palay market because the government will be able to build up its inventories for 2019,” Mr. Piñol said. — Reicelene Joy N. Ignacio

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

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