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AlloyMTD plans gov’t center-business hub in Bataan

THE AlloyMTD Group is in talks with the local government to develop a P3.6-billion government center and business hub in Bataan.
Patrick Nicholas P. David, president for AlloyMTD Holdings Philippines, said the company has started negotiations with the local government of Bataan for the project.
“We have a bigger budget for Bataan. I think the total cost is P3.6 billion. The area we’re developing is 10 hectares,” Mr. David told reporters at the Philippine Economic Zone Authority (PEZA) headquarters in Taguig City on Friday.
The Bataan project is also envisioned to have a business hub where export-oriented industries can be established.
Mr. David said the company is looking to replicate the project in other provinces, citing Ilocos Norte, Ilocos Sur, Batangas and Surigao as viable areas.
“[I]t’s ease of doing business that we were lacking. With this, we hope it improves. We don’t have to spend time and money to go around cities, or from one city to the next or from one town to the next just to get documents. We are envisioning that when opening a business, you go to one building and everything is there,” Mr. David said.
AlloyMTD is currently developing the Palayan City Government Center and Central Business Hub in Nueva Ecija. The three-hectare property will feature government offices, as well as business process outsourcing companies. It has been declared as an information technology park and special economic zone.
The project will have a BPO center with two to three IT buildings that can accommodate between 5,000 to 6,000 seats.
Sutherland Global Services, a global business process outsourcing (BPO) company, is setting up shop at the Palayan City business hub. The firm will commence operations in September and is expected to create at least 1,000 jobs.
Palayan City Mayor Adrianne Mae J. Cuevas said more BPO firms have expressed their intent to locate in the business hub after it was declared a special economic zone. — JCL

T-bills to fetch higher rates due to thin demand

By Karl Angelo N. Vidal, Reporter
TREASURY BILLS (T-bills) on offer this week will likely fetch higher yields amid lower demand as the market expects the local central bank to raise its policy rates anew following the faster-than-expected June inflation print.
The Bureau of the Treasury (BTr) is offering P15 billion worth of T-bills at its auction today. Broken down, the Treasury will raise P4 billion and P5 billion via three- and six-month papers, respectively, and another P6 billion from the one-year debt papers.
Traders said over the weekend that yields on the shorter-termed papers will likely pick up, with one saying rates could rise by about 10 to 15 basis points across the board from the previous auction.
Last Monday, the government partially awarded the T-bills it placed on the auction block, raising just P11.9 billion out of the P15 billion it wanted to borrow.
Broken down, at that auction, the BTr accepted P4 billion as planned in the 91-day tenor, fetching an average rate of 3.404%, lower by eight basis points from the previous auction.
The Treasury however partially awarded the 182- and 364-day papers, borrowing just P3.04 billion and P4.029 billion, respectively. The rate of the six-month bills climbed 6.4 basis points to 3.937%, while the yield on one-year securities also rose to 4.566% by 13.7 basis points.
At the secondary market on Friday, the three- and six-month debt notes fetched 3.2639% and 3.8254%, respectively, while the one-year papers were quoted at 4.5625%.
The trader said the T-bills on auction today “will see weaker demand” from investors.
“I don’t think people are inclined to buy at this point,” the trader said in a text message on Saturday, noting the market is expecting the Bangko Sentral ng Pilipinas (BSP) to hike its interest rates again following higher inflation last month.
The government reported on Thursday that headline inflation accelerated to a fresh five-year high of 5.2% in June.
Last month’s inflation print surged from May’s 4.6% figure and was faster than the 4.7% median in a BusinessWorld poll.
The latest figure also exceeded the 4.3-5.1% estimate range by the Bangko Sentral ng Pilipinas and the 4.9% estimate of the Department of Finance.
Price increases in June were led by alcohol and tobacco (20.8%), transport (7.1%), as well as food (6.1%).
BSP Governor Nestor A. Espenilla, Jr. said the uptick in inflation was “a setback.”
“We will review and update our situational assessment and forecast inflation path,” Mr. Espenilla said last week. “This will shape the strength and timing of our next monetary policy response to firmly anchor inflation expectations.”
“The market may start pricing in another rate hike from BSP after the inflation data,” the bond trader added.
The BSP has already raised its rates twice this year, with borrowing costs now within a 3-4% range.
The Treasury is set to raise P300 billion from the domestic market this quarter through auctions of securities, offering P195 billion in T-bills and another P105 billion in Treasury bonds.
Aside from this, plans for another dollar bond float as well as yen-denominated “samurai” papers are also being finalized.
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.

Gaultier lights up Paris fashion week with provocative ode to smoking


PARIS — With sultry tuxedos and a gown that appeared to waft down the catwalk like cigarette smoke, French designer Jean Paul Gaultier celebrated smoking in all its forms on Wednesday in a fashion show filled with tongue-in-cheek digs at overly rigid attitudes.
Reinterpretations of “Le Smoking” — or tuxedos for women popularized by late French couturier Yves Saint Laurent in the 1960s — dominated the Haute Couture collection, with black and white combinations of jackets and ruffled dresses for instance.
The designer took smoke as his inspiration for a see-through dress decked out in swirling embellishments, or a wedding gown with a featherlight, waspy train that looked like it could vanish into thin air as it twirled on the runway.
Gaultier, the self-style “enfant terrible” of the fashion world, was also deliberately harking back to a period when smoking was more widely acceptable.
“I don’t smoke, but I was always surrounded by people that were smoking,” Gaultier said after the show in Paris.
“I don’t say ‘don’t smoke or smoke,’ it’s only that people should do what they want.”
Smoking was banned in public places in France in 2006, echoing clampdowns in many other countries by authorities for health reasons.
FREE THE NIPPLE
The flamboyant designer showed his support for a Florida teenager who was made to cover her nipples in bandages at her high school for not wearing a bra under her sweatshirt. Lizzy Martinez, 17, made headlines in April when she said teachers told her to wear a second shirt and put plasters on her nipples after they claimed other students had been distracted by her breasts.
Gaultier said it was a “scandalous” that a girl should be treated that way, and used his collection to support her.
He told AFP that if “men had the right to go bare-chested why not women?”
And to hammer home the point he had a barechested male and female model walk the catwalk, each wearing see-through police visors with the legend, “Free the nipple” in French and English.
“You can see the nipples and the jewelry but you can’t touch,” he said. “I don’t say that you must bare your breasts. I am very much for corsets and bras, clearly I like them,” said the designer who came up with Madonna’s famous conical bustiers. “But a woman should be allowed to not to wear a bra under her T-shirt,” he added.
Gaultier played with nipple visibility in four other looks in his autumn-winter collection that was a typically playful celebration of liberty and transgression.
“We are living in a quite policed world, and I was looking for a pretext to show freedom for all,” he said. “I wanted to show that you can walk around with bare breasts without be attacked or aggressed. It’s all about freedom to enjoy yourself and not take life too seriously.”
Gaultier’s couture brand is owned by private Spanish fashion and fragrance group Puig.
Paris Haute Couture Week — where a select club of fashion houses present their one-of-a-kind creations and showcase some of their most elaborate styles — ran until July 5. — Reuters/AFP

Growers seek to tap China demand for frozen durian

DAVAO CITY — Growers and exporters are meeting later this month at the 2nd Durian Summit, in a bid to find ways to meet Chinese demand for frozen durian.
Davao City Durian Industry Council (DCDIC) President Candelario B. Miculob said Chinese traders were in town in May and wanted more frozen durian than what was available.
“They did not set a limit for the quantity. The only problem is we have limited processing capacity. The Chinese want frozen durian… it is easier to export and it is also advantageous for us,” Mr. Miculob said during the Habi at Kape media forum last week.
He said that while the Philippines has a much smaller area planted to durian compared with three other southeast Asian countries, the August to October harvest period here coincides with the off season in these other exporting nations.
Thailand has the biggest durian farming area at more than 96,000 hectares (ha), followed by Malaysia with more than 70,000 ha, and Indonesia with around 50,000 ha. The Philippines, on the other hand, only has 16,000 ha, mainly in Mindanao.
“We have the opportunity to supply because in August, September and October, there is no production in other countries. These are the opportunities that we hope to take advantage of,” he said.
Apart from increasing production and expanding processing capacity, the industry also needs to address the declining area planted to durian due to rapid land conversion.
“We want to share the current developments of the durian industry and the market opportunities available today. We would like also to raise lots of issues during the summit,” Mr. Miculob said.
Among those expected to attend the summit on July 19-20 as speakers, resource persons and participants are representatives from China, the Department of Trade and Industry, Department of Science and Technology, farmers, and processors.
The industry is also preparing for the Durian Festival on Aug. 10 to Sept. 25, which forms part of Davao City’s annual Kadayawan Festival.
“We are expecting a lot of production this year, unlike last year the volume of fruits were limited (due to rains). Mangosteen is coming also as well as lanzones and rambutan. There’s a lot of fruits this year, luckily,” Mr. Miculob said.
Mr. Miculob said growers are expecting a harvest of around 48 metric tons of durian during the Kadayawan season.
“We have different (durian) varieties because almost all the varieties really bore fruit. We have a survey involving durian growers of the region and almost everybody said that all trees bore fruit,” he said.
In the Davao Region, which has four processing centers, up to 70% of the harvest usually goes to the export market.
“In 2015 there was so much durian, but in 2016 we were hit by drought and there was so much rainfall in 2017. We are recovering this year,” he added. — Maya M. Padillo

Top Japan fashion site bets big on private brand, body scanning

THE KEY to a perfect fit with Start Today’s new clothing line hinges on the Zozosuit, a polka-dot studded bodysuit that lets users measure their proportions with a smartphone camera.

JAPAN’S largest e-commerce company is betting that it has found the key to selling clothes online: a size-measuring bodysuit and its own line of clothing.
Start Today Co., which runs a shopping site in Japan called Zozotown that’s popular with younger consumers, unveiled its own made-to-fit private label T-shirts, jeans, and business suits as it pushes deeper into web-based apparel sales. The clothes are meant to be sold to customers using a body-scanning suit and app developed by the company, which is renaming itself Zozo Inc. from October.
Selling clothing online has been a big challenge for web retailers because sizes, colors, and looks are hard to gauge on the web. Sellers often offer free returns to spur purchases, but that also drives up costs and risks alienating customers. Start Today’s billionaire founder Yusaku Maezawa is betting that his strategy of offering made-to-fit apparel will help it expand overseas and quintuple its market capitalization in the next decade.
“Anyone in the world can relate to worries about clothing size,” Maezawa, 42, said in an interview. “When we looked overseas, we couldn’t find any companies that were offering lower-cost clothing that fit well. There was a need for that.”
Amazon.com Inc., which has been making an aggressive push into online apparel, last year bought Body Labs, a 3-D body-scanning start-up that lets people create a digital avatar of themselves to try on virtual clothes. In response to Start Today’s announcement of private brand men’s business suits and dress shirts — offered at a discounted ¥24,800 ($225) for a limited time — shares of Japanese suit sellers Aoyama Trading Co. and Aoki Holdings Inc. fell on Tuesday last week.
The key to a perfect fit with Start Today’s new clothing line hinges on the Zozosuit, a polka-dot studded bodysuit that lets users measure their proportions with a smartphone camera. Sales initially started with T-shirts and jeans, and the company added men’s business suits to its lineup. It also announced that the service and private brand would be available in 72 countries including the US by the end of July.
“If they can build a successful apparel-selling platform based on body measurements data, it can be huge,” said Akira Iwasaki, an analyst at Iwai Cosmo Securities Co. in Tokyo who has a buy rating on Start Today.
The growth plan is a big bet for a company that gets about 90% of its sales by providing a marketplace for clothing by other brands. Maezawa said Start Today is looking at potential acquisitions that could improve its measuring technology and production capabilities. While Rakuten Inc. is often seen as Japan’s home-grown e-commerce pioneer, Start Today is bigger, with a market capitalization that’s 25% higher at ¥1.3 trillion.
The company created a unit Start Today Research this year to acquire ideas and technologies related to fashion and clothing fit. It also made headlines in Japan in April when it offered annual salaries of as much as ¥100 million to find employees specializing in fields such as artificial intelligence, robotics and cryptography. — Bloomberg

GERI expects P1.2 billion in sales from residential condo in Laguna

GLOBAL-ESTATE Resorts, Inc. (GERI) expects to generate P1.2 billion in sales from its newly launched residential property in Southwoods City in Laguna, following the strong take-up for its first project in the estate.
The leisure and tourism subsidiary of Megaworld Corp. said in a statement over the weekend that it will be launching Tulip Gardens, a 22-storey residential condominium project in Southwoods City in Biñan, Laguna.
The development will offer studio units covering up to 28.5 square meters (sq.m.) and one-bedroom units reaching up to 41 sq.m., for a total of 372 units spread out over five mid-rise buildings.
Amenities include jogging paths, picnic areas with cabanas and pavilions, indoor playroom, two outdoor playgrounds, a fitness center, a lap pool, a kiddie pool, and a multipurpose hall.
Some units will also have their own lanai which can give residents a view of Southwoods City, Laguna, and Cavite.
“Tulip Gardens is an innovation in residential high-rise living, where leisure and relaxation take center stage in a community setting. We are providing more amenities so that our residents will feel like they live in a resort,” Megaworld Global-Estate, Inc. Vice-President for Sales and Marketing Mary Rachelle I. Peñaflorida said in a statement.
The newest development inside Southwoods City will be located near the newly opened Southwoods Mall and the Sto. Niño de Cebu Parish, and can be accessed through the Southwoods exit of the South Luzon Expressway.
The listed firm targets to complete the project by 2023.
Tulip Gardens is GERI’s second residential project in Southwoods City, following the launch of Holland Park back in 2014. The company said Holland Park has so far sold P2.7 billion worth of units from its four towers.
“The spike in the demand for residential condo units in Southwoods City was a big surprise considering that the township has been known for its vast horizontal residential villages like Pahara,” Ms. Peñaflorida said, referring to the 26-hectare upscale residential village inside Southwoods City that was launched in 2014.
The GERI executive added that they have so far sold out more than 600 units of Holland Park, and that “the demand for more units continues to grow.”
Southwoods City is a 561-hectare township of GERI’s sister firm Megaworld, which is being positioned as the next central business hub outside Metro Manila.
GERI booked P406.9 million in net income attributable to the parent during the first quarter of 2018, up by a fourth than the P325.8 million it realized during the same period a year ago. Revenues, meanwhile, were flat at P1.66 billion.— Arra B. Francia

Peso to move within tight range after positive US data

THE PESO will likely move sideways against the dollar this week on the back of likely mixed economic data in the United States and as well as potentially weak Philippine trade figures.
The peso ended the week at P53.42 against the greenback, flat from its close on Thursday.
Week on week, Friday’s closing rate was however weaker than the P53.34-per-dollar finish on July 1.
“We’re expecting the peso to continue to trade within a very tight range this week as the market will take cue from the US unemployment data,” a trader said in a phone interview on Friday.
The US economy added 213,000 jobs in June, data released on Friday showed, versus the 195,000 market expectation in a Reuters poll.
However, unemployment rose to four percent in the same month as more people sought new jobs.
“The latest US labor reports were strong enough to confirm the health of the US economy, but not excessively upbeat to fuel speculations of even more aggressive moves from the US Federal Reserve,” Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said in an e-mail.
Despite the mixed labor report, analysts said trade concerns will continue to weigh on market sentiment.
The $34 billion worth of tariffs on Chinese goods slapped by US President Donald J. Trump took effect on Friday. In return, China said imported US goods including cars, soybeans and lobsters facing 25% levies, Reuters reported.
“While the trade war between the US and China could support safe-haven demand, the dollar might not fully benefit from it…as investors over the weekend focused their attention more on the possible negative impact of the trade war on the US economy,” Mr. Dumalagan said.
Toward the end of the week, Mr. Dumalagan noted the dollar might rebound against the local unit due to possibly strong US reports on producer and consumer price inflation and a potentially wider local trade deficit.
“While the possible widening of the Philippine trade deficit is a reflection of the country’s upbeat investment spending, some market participants might interpret the report negatively, looking at its subtractive role in the expenditure approach in computing gross domestic product,” he said.
For this week, the trader sees the peso to move between P53.30 and P53.55, while Mr. Dumalagan gave a wider P53-P53.60 range. — Karl Angelo N. Vidal

DoTr: China’s Dalian should pay for technical adjustments on MRT trains

THE Department of Transportation (DoTr) insisted that Chinese firm CRRC Dalian Co. should pay for the cost of any technical adjustments required to accommodate the 48 new trains for the Metro Rail Transit Line 3 (MRT-3).
Transportation Secretary Arthur P. Tugade met with officials from Dalian last week to discuss the results of the audit conducted by certifier TUV Rheinland of the train sets.
“Dahil doon sa pag-uusap na iyon, nagkasundo ‘ho na kung may mga dapat gawin at dapat lamang na gawin, kung gusto natin gamitin, lahat ‘ho ng gastusin na iyon ay a-absorb-in ng Dalian without a single cent of expense from the Philippine government [Because of that discussion, we have agreed on what to do if we want to use the trains. All the expenses for that would be absorbed by Dalian without a single cent of expense from the Philippine government],” Mr. Tugade said in a statement.
The DoTr referred to the results of the audit, which showed Dalian trains could still be used on the MRT-3 if adjustments are made.
“Kapag nirepaso mo ’yung evaluation, para bang sinasabing pag ito’y naisaayos sa tamang pamamaraan, puwede mo pang magamit ’yung bagon at tren without sacrificing the safety, the security and life of the passengers and the system [If you review the evaluation, it seems to say when the issues are fixed properly, the coaches and trains could still be used without sacrificing the safety, the security and life of the passengers and the system],” Mr. Tugade added.
He noted the problems concern variations in the measurements and weight of the new trains.
Despite this, Mr. Tugade said the work needed to be done on the Dalian trains is “manageable.”
The governments of the Philippines and China will meet on Aug. 20 to specify the details of the adjustments needed to be done by Dalian.
The trains from Dalian were purchased by the Aquino administration, meant to be additional coaches on the MRT-3. The DoTr earlier said the trains could not be used because of incompatibility with the system, and ordered an independent audit by TUV Rheinland. — Denise A. Valdez

GSIS sets minimum rating for reinsurance bidders

GOVERNMENT SERVICE Insurance System (GSIS) is now requiring firms wishing to join the pension fund’s bidding for reinsurance contracts to carry a minimum credit rating of B+.
In a statement, the state pension fund said potential bidders are now required to submit a proof of a credit rating of at least B+ from rating firm A.M. Best.
“[I]t is vital to set a minimum credit rating as a requirement for potential bidders of reinsurance contracts. In this way, we are confident that our reinsurers can meet their financial obligations when they fall due,” GSIS President and General Manager Jesus Clint O. Aranas was quoted as saying in the statement.
According to A.M. Best’s Financial Strength Rating guide, a “B” rating is assigned to firms that have “a fair ability to meet their ongoing insurance obligations.”
Aside from this, the securities or panel of reinsurers, whether foreign or local, should be rated at least “A” by A.M. Best. The foreign securities or panel of reinsurers must be authorized to transact in the Philippines through their resident agent.
Mr. Aranas said the pension fund’s reinsurance contracts undergo public bidding to ensure that all potential reinsurance companies have access to fair and transparent bidding process.
Under Republic Act No. 656 or the Property Insurance Law, government units, agencies, commissions and state owned and controlled firms are required to insure their properties with GSIS against an insurable risk and pay the corresponding premiums. — KANV

DA studying rubber partnership with Papua New Guinea

THE Department of Agriculture (DA) said it is is studying a parnership with Papua New Guinea for the development of the rubber industry.
Agriculture Undersecretary for Agribusiness and Marketing Assistance Service (AMAS) Jose Gabriel M. La Viña told BusinessWorld in a chance interview that a collaboration is a “new possibility to look into” after Papua New Guinea Rubber Board Chairperson Josephine Kenni on Wednesday last week paid a visit to the DA.
“They’re looking at the same thing — how they can upstream their own rubber and plant more. Maybe we can get Filipino investors there to plant so maybe that’s something we can work together with them,” he added.
Mr. La Viña was appointed in June with a brief to develop the rubber industry.
“(Secretary Emmanuel F. Piñol) is not happy about how our rubber is being bought very cheaply and comes back here very expensive in [the form of] tires,” Mr. La Viña said.
The Philippine Statistics Authority (PSA) said raw rubber exports in the four months to April dropped by 42.3% to $23.90 million while rubber manufacture imports in the same period rose 3% to $191.62 million.
AMAS wants to recruit more processors and manufacturers to locate in the Philippines, preferably closer to or in Mindanao, where the rubber industry is located.
Prior to the prospective rubber partnership, the Philippines and Papua New Guinea in March agreed to collaborate in rice production, with companies from the Philippines planting rice on a 100-hectare demonstration farm in Papua New Guinea.
According to the Philippines’ industry road map for rubber, the government has a revenue target of P100 billion by 2030.
The 2017-2022 road map also hopes to increase rubber exports by 10% while establishing a tire manufacturing facility in Mindanao.
The government, however, found that the land formerly allotted for planting rubber was used instead for bananas or cash crops.
Despite this, PSA reported that the first quarter of 2018 saw rubber (cup lump) production go up by 4.4% to 45,370 metric tons due to more tappable trees in North Cotabato and Zamboanga Peninsula. The bulk of the country’s rubber was sourced from Soccsksargen. — Anna Gabriela A. Mogato

When a physical therapist designs a pillow, it can get very interesting

THE PRIGINA: Mr. Big pillow is called the “9” after its shape.

BANGKOK-BASED sleep essentials brand, Mr. Big, known for “physical therapist-designed pillows” for “ergonomic comfort” has arrived in the Philippines hoping to improve Filipino’s sleep quality.
“There’s this wellness movement that is happening globally and that includes people wanting to have a really good night’s sleep,” Tom Castaneda, AVP for Marketing at SM Home, told BusinessWorld during the launch in June 21 at SM Makati.
“In recent years, we noticed that linens are really important for our customers. We saw an increase in pillowcases [sales] and mattresses do really well,” he said, before adding that this is likely because more and more people are renting or buying condominium units.
Mr. Castaneda said they thought of bringing Mr. Big to the country because “the items are really well thought out and are designed by a physical therapist.”
Mr. Big founder, Chawakit Kaoien, was formerly a physical therapist who was working in the intensive care unit (ICU) of a hospital’s respiratory unit. It was because of his responsibility to ensure that critical care patients in this unit could breathe properly and were comfortable that he was said to have “mastered the clever positioning of pillows.”
“To improve the condition of my patients, as well as their quality of life, I would arrange their sleeping positions for various purposes such as to reduce pressure and soreness, to ease pain, to promote blood circulation, and many more,” Mr. Kaoien was quoted as saying in a press release.
He then created what he calls the “9” pillow (named for its shape) which offers an “ergonomic solution for those who prefer to sleep on the sides” as it provides support “in all the right places, ensuring a much more comfortable and restful sleep that won’t result in body aches the next day,” said a company press release.
Aside from the “9” pillow, Mr. Kaoien also created several other pillows, plus duvets and mattresses meant to cater to people of different needs, sleeping habits, and demographics.
Before buying a custom pillow, staff are supposed to input a person’s height, weight, as well as preferred sleeping position (side, back, or stomach) in an app which then recommends the most suitable pillow for the customer.
The pillows are stuffed with “Elasta Fiber,” a material imported from the UK that is said to provide “optimum cushioning and tension and does not clump over time. Pillow shells are 100% cotton, hypoallergenic and dust mite resistant,” said the release.
“The Philippines is quite like Thailand in body size and shape, so the products we offer are suitable here,” Mr. Kaoien told BusinessWorld shortly before the launch.
The brand is currently in six markets in Asia — Thailand, Vietnam, Malaysia, Korea, the Philippines, and Hong Kong — but Mr. Kaoien revealed that they are already setting their sights beyond the region with Australia and the US coming next.
Though he refused to say when they are going to expand into these markets, he said they would have to create and adjust their products to fit the Australian and US markets because the people there are generally bigger than their Asian counterparts and “have different preferences.”
“I have to do a lot of homework [before the expansion],” said Mr. Kaoien.
Mr. Big is currently available in SM Home stores in SM Makati, SM Aura, SM Megamall, and SM Mall of Asia. — Zsarlene B. Chua

Yields on gov’t debt mixed

By Jochebed B. Gonzales, Senior Researcher
YIELDS saw mixed movements last week as investors priced in the escalating trade war between the US and China and after domestic inflation reached a fresh five-year high.
Prices rose as yields on government securities dipped by 6.16 basis points (bps) on the average week on week, data from the Philippines Dealing and Exchange Corp. as of July 6 showed.
“There were two main factors that affected yields [last] week: the US-China trade war and the country’s higher-than-expected inflation,” said Land Bank of the Philippines (LANDBANK) market economist Guian Angelo S. Dumalagan.
“The influence of lingering trade tensions more than offset the impact of the country’s upbeat inflation data, resulting in an overall downward bias in interest rates,” he added.
Last week, the US began slapping 25% customs duties on $34 billion worth of Chinese commodities to which China responded by also imposing 25% border tax on the same amount of American goods that enter their country.
Meanwhile, domestic prices rose at a rate fastest in at least five years in June, the Philippine Statistics Authority reported on Thursday. The 5.2% headline print was beyond market and government expectations.
“Last month’s higher-than-expected inflation increased the yields of some tenors. While market participants expected inflation to pick up, many were surprised that inflation breached the BSP’s forecast range for the month, an occurrence which increases the chances of more rate hikes from the BSP this year,” said Mr. Dumalagan.
Also last week, the Bureau of the Treasury (BTr) rejected all bids for the reissued 10-year bond after investors demanded higher rates for the said tenor. The offer was also undersubscribed, attracting only P14.84 billion in tenders against the P15 billion programmed by the government.
“The 10-year auction rejection due to elevated bids and the higher than expected CPI (consumer price index) data at 5.2% versus market consensus at 4.8% led to more defensive levels and greater selling interest from end clients and market participants,” said Carlyn Therese X. Dulay, first vice-president and head of institutional sales at Security Bank Corp.
A bond trader agreed, saying some investors had “unloaded” after inflation was “way too far” from market expectations.
At the secondary market on Friday, the yield on the 91-day Treasury bill (T-bill) saw the steepest decline, losing 64.32 bps to close with 3.2639%.
It was followed by the 10-year Treasury bond (T-bond) which shed 6.69 bps to fetch 6.3548%. Yields on the three- and four-year tenors decreased by 4.57 and 2.32 bps, respectively, to 4.9766% and 5.6536%, while that of the 91-day T-bill dipped 1.99 bps to 3.8254%.
On the other hand, ending the week with gains were the 364-day T-bill and the two-, five-, seven- and 20-year T-bonds which went up 8.83 bps, 2.17 bps, 2.80 bps, 4.26 bps and 0.18 bp, respectively, to finish with 4.5625%, 4.8059%, 5.79%, 6.2908% and 7.3625%.
This week, the market will take its cue from the results of the US Bureau of Labor Statistics employment survey for the month of June, said Security Bank’s Ms. Dulay.
LANDBANK’s Mr. Dumalagan said players will also monitor external developments, particularly in the US and China.

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