When is it time to give back?
M. A. P. Insights
Pacita U. Juan
On a long day flight to New Delhi, I got to watch three documentaries with a common theme: giving back or simply giving.
Villar-led Vista Land prices P5-B retail bond offer
VISTA LAND and Lifescapes, Inc. has finalized the interest rates for the P5-billion fixed-rate retail bonds it plans to issue before the end of the month.
In a disclosure to the stock exchange on Monday, the Villar-led property developer announced a 5.7512% per annum interest rate for the Series A bonds that will mature in seven years or by 2024. Meanwhile, the Series B 10-year bonds due on 2027 will have an annual interest rate of 6.2255%.
The listed firm has allotted P3 billion for the principal amount of the offer, with an over-allotment option of P2 billion.
The offer represents the first tranche of the company’s P20-billion bonds filed under the shelf registration program of the Securities and Exchange Commission.
Vista Land will be offering the bonds from July 18-27, tapping China Bank Capital Corp. as the offer’s sole underwriter. The bonds will then be listed and traded at the Philippine Dealing and Exchange Corp. starting on Aug. 4.
The bonds have been assigned an “AAA” issuer rating by local debt watcher Credit Rating and Investors Services Philippines, Inc. (CRISP). This indicates a stable outlook for the company.
In assigning the rating, CRISP cited the company’s leadership in the low-cost and affordable housing market, financial performance, the strength of its management team, as well as its successful operating model.
Vista Land has housing developments in 111 cities and municipalities spread out across 44 provinces in the country, totaling to around 300,000 homes built since the company started operating in 1977.
The company has five residential business units, namely Brittany Corporation, Crown Asia Properties, Inc., Camella Homes, Inc., Communities Philippines, Inc., Vista Residences, Inc. Its unit Starmalls, Inc. operates malls located in Mandaluyong and Muntinlupa.
Vista Land looks to net a maximum of P4.93 billion with the offer, the proceeds of which will be used to finance the construction and completion of the Evia Lifestyle Center, Vistamall Malolos, as well as for general corporate purposes.
Evia Lifestyle Center is the commercial component inside Vista Land’s Evia, a 600-hectare development that spans Metro Manila and Cavite set to include three master-planned residential estates developed by Vista Land’s units.
In 2017, Vista Land allotted a capital expenditure of P35.3 billion for its expansion into 100 new cities, as well as for increasing its leasing business.
Earnings of the company showed an 11% increase in the first quarter of 2017 to P2.3 billion.
Shares in Vista Land rose by two centavos or 0.34% to close at P5.96 apiece on Monday. — Arra B. Francia
Peso sinks to fresh 10-year low vs dollar
THE PESO opened the week lower against the dollar, plunging to its weakest level in over a decade, amid market appetite for the foreign currency.
The local unit finished at P50.70 on Monday, down five centavos from its P50.65-per-dollar finish on Friday.
Yesterday’s close was also the peso’s worst finish in more than 10 years or since it closed at P50.735 per dollar last Sept. 1, 2006.
The peso opened the session at its intraday high of P50.55 per dollar. Its closing rate was its low for the day.
One trader said the peso was still in consolidation after low liquidity was seen in yesterday’s session.
“The peso opened lower this morning, practically in lined with dollar weakness on Friday’s session but overall it’s still pretty much in consolidation due to the low volume seen yesterday,” the trader said by phone on Monday.
Dollars traded stood at $255.95 million yesterday, down from the $379.45 million that changed hands on Friday.
“There was also a slight bounce in the dollar that contributed to the dollar move,” the trader said.
Meanwhile, another trader said strong appetite from buyers abroad and at home was present towards the afternoon session.
“Initially, the market traded lower due to mixed data on CPI (consumer price index) in the US last Friday which the market interpreted as negative for the dollar, but then this afternoon there was demand from local and foreign buyers and higher non-deliverable forward levels,” the trader said in a phone interview on Monday.
US consumer prices were unchanged in June and retail sales fell for a second straight month, pointing to tame inflation and soft domestic demand, the government reported on Friday.
For today, one trader said the exchange rate could settle within P50.55 to P50.80 while the other trader said the peso could trade between P50.60 to P50.80 versus the greenback.
ASIAN UNITS RISE
Most Asian currencies edged higher on increased risk appetite as investors tempered their expectations for a third interest rate hike by the Federal Reserve this year following weak US economic data for June.
The dollar index was up just 0.05% at 95.195, not far away from its 10-month trough hit on Friday.
“While odds of balance sheet reduction in September seems to have increased, chances of another hike by year end seems to have come down, because of the lower than expected inflation. This is positive for Emerging Asian (EM) currencies,” said Sim Moh Siong, foreign exchange strategist at Bank of Singapore.
“I think for now, the theme is hunt for yield in the EM markets”.
Fed funds futures imply around a 50-50 chance of another hike by December, and have less than two moves priced in for all of next year. Fed policy makers have pencilled in one more rise this year and a further four in 2018.
China’s economic data showing second-quarter gross domestic product grew at a faster pace than expected pace also lifted Asian currencies, even as analysts tip momentum to cool over the rest of the year as policy makers seek to reduce financial risks.
China’s yuan inched up after the central bank lifted its official guidance for the currency’s midpoint to an 8-1/2-month high.
RISK-ON MOOD
Trade data from Singapore was also solid, with exports growing at double the expected pace last month, and helping the local dollar edge up to its highest since October last year.
In Indonesia, data showed exports and imports contracted in June on a yearly basis for the first time in nine months, though the country still posted a trade surplus.
The Indonesian rupiah was up nearly 0.2% against the dollar on the day.
The broader risk-on mood also pushed the South Korean won up nearly half a percent. Analysts expect robust exports data for the first 20 days of July, due out on Thursday.
Thomson Reuters data showed the volatilities of most of the Asian currencies have declined recently. The 3-month volatility of the Indonesian rupiah stood at 5.17% on Monday, compared to 9% at the start of the year, while the Indian rupee’s volatility stood at 4.7%, much lower than 5.75% at the start of the year.
Analysts said the scenario is perfect for carry trades.
“Generally the high yielding ones like the Indian rupee and Indonesian rupiah will be preferred for carry trades,” said Bank of Singapore’s Sim.
“They have seen a bit of a wobble over the last few weeks. Some of that wobble may start to settle down, given the growth is resilient globally and the central banks are quite cautious in tightening going forward.” — JMDS with Reuters
Review hopes to resolve issue of solar power generators locked out of FiT
THE review of the country’s feed-in-tariff (FiT) system by yearend will also cover the resolution of the “stranded” solar power capacity, the Department of Energy (DoE), said, with the policy of encouraging of the growth of renewable energy continuing until the end of 2017.
Mario C. Marasigan, who heads the DoE’s renewable energy management bureau, said existing rules call for the review of the FiT system three years after the imposition of the FiT allowance, a uniform rate billed to all electricity users.
“Will there be a new installation target? That will depend on the review and assessment being conducted by NREB (National Renewable Energy Board) and DoE,” he told reporters, referring to the body that sets the direction for renewable energy in the country.
The review is also timed to coincide with the deadline for developers to subscribe to the installation target set by the department for solar, wind, biomass and run-of-river hydro energy capacities.
“We’re now setting a new environment for renewable energy,” he said.
Mr. Marasigan said NREB has created a technical working group to review why the installation targets for solar and wind were fully taken up while those for biomass and hydro remained undersubscribed.
For solar, he said a new installation target or an extension of the feed-in-tariff are not likely considering that a bilateral power supply agreement had been forged for P4.69 per kilowatt-hour (kWh), or way below the FiT rate under the 500-megawatt (MW) installation target.
He said the bilateral agreement could be used “as an avenue to declare that solar has reached grid parity.” He questioned the need for a solar FiT when the technology is already competitive in the market.
Under the solar installation target, solar projects were built on the prospect that they will get a rate of P9.68 per kWh during the first phase of the FiT incentive scheme, and a rate of P8.69 per kWh during the second phase.
The scheme ended in March 2016 in what the industry called a “race to FiT” that saw the 500-MW target oversubscribed by about 360 MW. Many of the “stranded” solar farms without a guaranteed FiT were built in Negros where the transmission facility is unable to carry the new power capacity.
Mr. Marasigan said the yearend review should also answer why there was undersubscription for biomass and small hydro-power facilities.
Asked whether the FiT for the two renewable energy technologies would be extended, he said: “We cannot commit on anything at this time [because] our assessment is not complete. Nonetheless, were looking at other options.” — Victor V. Saulon