Villar-led Vista Land prices P5-B retail bond offer

July 18, 2017 | 12:04 am

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

July 18, 2017 | 12:03 am

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.

peso notes 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

Meralco Bolts ready to play in Govs’ Cup sans Chris Lutz

July 18, 2017 | 12:03 am

INJURED swingman Chris Lutz had yet to see action for his new team, the Meralco Bolts, who gambled on acquiring him despite his condition.

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Round 1: Brexit talks start in Brussels with 20 months to go

July 18, 2017 | 12:03 am

BRUSSELS — British and European Union (EU) envoys on Monday began a first round of negotiations on Britain’s divorce from the EU with both sides saying it was high time to tackle details, though feuding within the London cabinet over Brexit terms may trouble the process.

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4,000 butane canisters confiscated in Davao City

July 18, 2017 | 12:03 am

A MULTI-AGENCY task force confiscated 4,000 butane canisters in June alone as the Davao City government steps up efforts to put a stop to the sale of such containers. A Department of Energy circular prohibits the “refilling of LPG (liquefied petroleum gas) in tin canister or cartridge not designed for LPG.” “Butane canister is for one-time use and cannot be refilled as it is prohibited,” Business Bureau Chief Marissa M. Torrentera said in an interview. “It may be cheap at only P20-P25 per canister,” she added, “but we do not know the hazard it presents.” Ms. Torrentera said there are no known butane refilling businesses in the city, but the tin cans continue to be sold as there are reportedly refilling stations in nearby areas. — Carmencita A. Carillo

Singapore home sales fall 21% in June as fewer projects launched

July 18, 2017 | 12:03 am

SINGAPORE home sales fell 21% in June from the previous month as fewer new projects were launched in the city-state.

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Review hopes to resolve issue of solar power generators locked out of FiT

July 18, 2017 | 12:03 am

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

Ang acquiring Prieto interest in Inquirer

July 18, 2017 | 12:03 am

By Krista A. M. Montealegre
National Correspondent

BILLIONAIRE Ramon S. Ang is set to take over the Inquirer Group of Companies after the Prieto family decided to exit the business.

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Spirituality and social service

July 18, 2017 | 12:03 am

To Take A Stand
Mario Antonio G. Lopez

Being mindful of the needs of the people we serve and giving these priorities in our programs seems like a no brainer. Yet, often, in government, business and nongovernment organizations the needs of the bureaucracies that run these organizations become the paramount concern, and the wishes of the managers become the primary concern.

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Phinma abandons plan to buy Laguna college

July 18, 2017 | 12:03 am

PHINMA Corp. has abandoned plans to conduct a tender offer for the purchase of a majority stake in Laguna College of Business and Arts (LCBA).

Phinma To recall, the listed firm’s education arm, Phinma Education Holding, Inc. had announced on April 4 its plan to conduct a tender offer to acquire a majority stake or at least 55% in LCBA, with the 1.08 million shares of LCBA priced at P290 each.

“(A)fter determining that less than a majority of the stockholders of LCBA will sell their shares, Phinma Education has decided not to proceed with the tender offer,” the company said in a disclosure to the stock exchange on Monday.

LCBA would have been the Phinma group’s sixth educational institution, following Phinma Araullo University, Phinma Cagayan De Oro College, Phinma University of Pangasinan, Phinma University of Iloilo, and Southwestern University.

Incorporated in 1957, Phinma currently has investments in education, steel products, housing, business process outsourcing and the energy sector.

Phinma Education reported a 20% increase in revenues during the first quarter of 2017 to P554 million, following a 7% increase in enrolment during school year 2016 to 2017 to 54,691 students. The firm contributed P42 million to the parent’s net income of P48 million, which is 46% lower than what it posted in the same period a year ago.

Shares in Phinma were up by 10 centavos or 0.96% to close at P10.50 each on Monday. — Arra B. Francia

Thrift lenders post higher NPLs as of May

July 18, 2017 | 12:02 am

BAD DEBTS held by thrift banks increased in May to match the rise in total lending, latest central bank data showed, driven by upbeat consumer demand.

Non-performing loans (NPLs) held by thrift banks rose to P40.85 billion that month, picking up by 13.4% from the P36.033 billion in soured loans tallied in May 2016, according to the Bangko Sentral ng Pilipinas (BSP).

NPLs refer to unsettled debts at least 30 days past due date, which are considered at risk of default.

The rise in soured loans matched the 13.8% increase in total credit lines extended by the financial firms, which rose to P801.554 billion from P704.471 billion a year ago.

Relative to the banks’ total loan portfolio, the share of NPLs steadied at 5.10% in May, coming from 5.09% in April and 5.11% a year prior.

Past due loans grew by 13.2% to hit P43.666 billion, while restructured loans — or debts with extended payment schedules — jumped 27.3% to P5.277 billion, according to central bank data.

Thrift banks are focused on retail borrowers and lending for consumer-related activities such as car and home loans, deemed more riskier compared to dealing with corporate borrowings.

On the other hand, the value of non-performing assets held by the lenders inched up by 5.8% to P23.07 billion from P21.811 billion. These represent seized real property and assets of value from defaulting clients which were used as collateral in securing loans.

With the higher NPL stash, thrift lenders hiked their reserves for potential credit losses to P28.44 billion from the P25.81 billion set aside in May 2016. However, the amount could not fully cover the entire value of bad debts with the NPL coverage ratio at 69.62%, even lower than the previous year’s 71.63% ratio.

The central bank monitors the NPL ratios of banks and financial firms to keep track of asset quality and maintain the soundness of the local financial system.

In a recent interview with BusinessWorld, the Chamber of Thrift Banks (CTB) said the lenders have maintained stability as it rides on rapid economic growth.

“Thrift banks remain committed to their niche markets and continue to help develop the various sectors considered to be part of the growth drivers of the economy,” CTB president Gregorio B. Anonas III said. “The thrift banking sector sustained its growth momentum with a solid performance amid lingering uncertainties in the global financial markets. Thrift banks remained stable as manifested by expansion in assets, loan portfolio, deposits and sufficient capitalization.”

Moody’s Investors Service previously flagged a possible increase in the amount of bad loans held by local banks as they “refocus” lending activities to retail clients and small-scale firms, but noted that it was unlikely to disturb the overall footing of the banking system.

The international debt watcher has kept its “stable” outlook for the Philippine banking system earlier this month, coupled with the “Baa2” credit rating or the country. — Melissa Luz T. Lopez

Rice stocks fall over 20% — PSA

July 18, 2017 | 12:02 am

RICE inventories fell by over 20% as of June 1, while the corn sector managed to triple its stocks, the Philippine Statistics Authority (PSA) said in a report.

corn_grain In its June 2017 Rice and Corn Stocks Inventory, PSA said that as of June 1, rice stocks were estimated at 2.57 million metric tons (MT), down 20.47% from a year earlier.

The June 1 level was down 19.95% from a month earlier.

This translates to 76 days worth of inventory — including stocks held by households at 32 days, commercial stocks 38 days and National Food Authority (NFA) depositories six days.

The state-run grains agency is required by law to maintain at least a 15-day buffer stock at any given time, and 30-day buffer stock during lean months.

Corn inventories were at 978,860 MT as of June 1, up 198% from a year earlier.

But the June 1 level was down 37.11% from a month earlier, the PSA added.

Year on year, corn stocks held by households increased by 71.30%, commercial by 222.09% and NFA warehouses by 1.36%.

Compared to the previous month, corn stocks in the households and in commercial warehouses decreased by 10.77% and 39.15%, respectively. But NFA stocks increased by 0.89%.

Around 89.97% of the total corn inventory was held by commercial warehouses, 9.32% by households and 0.65% by NFA depositories.

Corn is the main staple of 14 million Filipinos. — Janina C. Lim