Privatize assets to cut debt

April 30, 2024 | 12:02 am

There have been some good reports on the Philippines’ fiscal situation early this year. See these recent stories in BusinessWorld: “Debt service bill falls by 22% in Feb.” (April 22), “Budget deficit narrows in March” (April 25), and “NG gross borrowings fall in March” (April 29).

I checked the cash operations report released last week by the Bureau of the Treasury (BTr) for the first quarter (Q1) of 2024, then compared it with first quarter data of 2019 to 2023. Here are some of the highlights.

HIGHER REVENUES, DECLINING DEFICIT
1. For the first time, revenues have breached the P900 billion mark this year. The Bureau of Internal Revenue (BIR) collected nearly P600 billion, but the Bureau of Customs has been a laggard, with a nearly flat performance as in 2023.

2. The interest payment is high at nearly P200 billion, no thanks to the huge public debt stock of P14.97 trillion as of end-2023 and P15.18 trillion as of February this year, and the high interest rate policy of the Bangko Sentral ng Pilipinas.

3. The budget deficit was flat at the 2023 level, which is good as the deficit/GDP ratio should be lower. Again, thanks to the high revenues.

4. Financing or borrowing has dipped to below P800 billion, and this is good (see Table 1). In non-crisis years, borrowings should be kept to a minimum and higher revenues should be devoted to reducing the public debt and not creating new spending, like the lousy proposal to buy submarines, new battleships, and other paraphernalia of war.

In a social media post, Budget Secretary Amenah F. Pangandaman emphasized the role of fiscal transparency and discipline, the priority expenditures on human capital, infrastructure development, and digitalization of government transactions to improve our people’s productivity, government spending efficiency, and ease of doing business in the country.

When social and hard infrastructure spending is efficient, the overall productivity of the economy will increase, revenues will improve, and the need for new borrowing will also decline. Continue this path, Madame Secretary.

Finance Secretary Ralph G. Recto reiterated this in his Keynote speech during the Philippine Dialogue in Washington DC on April 17, saying, “In 2023, our fiscal deficit continued to narrow down to 6.2% of GDP from its peak of 8.6% at the height of the pandemic… attributed to the consistently higher government revenue collections and improved expenditure management, which prioritizes massive infrastructure projects and social services.”

HIGH REVENUES/GDP RATIO
Last week, this column presented data on government expenditures as a percentage of gross domestic product (G/GDP ratio) across countries from 2004 to 2023. Today I will present government revenues as percentage of GDP (R/GDP ratio).

The Philippines has a high R/GDP ratio of 20%, considering National Government revenues alone. If revenues by local government units (local business taxes, fees and charges) are added, this will increase to about 23%. Meanwhile, Hong Kong, Taiwan, Singapore, Vietnam, Malaysia, and Indonesia have R/GDP ratios of below 19% (see Table 2).

HIGH TAX/PROFIT RATIO
Table 2’s data for the Philippines may not look good for investors, local and foreign. Recall the World Bank’s annual Doing Business (DB) reports, especially on “Paying Taxes.” The Philippines has a high total tax and contributions as percentage of profit, 47% in the DB 2006 report and 41% in the DB 2020 report. Meanwhile, Vietnam and Malaysia have 38%, and Hong Kong and Singapore have only 16% and 19% respectively in the DB 2020 report (see Table 3).

The WB discontinued this project in 2021 after reports of data irregularities for DB 2018 and DB 2020 and they reviewed the audits and methodology. Nonetheless, the trend is there to see so that despite reported data irregularities in the 2018 and 2020 reports, there is consistency in the numbers. This will guide the current Philippines economic team on how to further improve the ease of paying taxes, and the President to discipline tax-hungry LGUs that discourage instead of encourage more business competition and dynamism in their localities.

In his first 100 days review as Finance Secretary, Mr. Recto highlighted that “Together with the Development Budget Coordination Committee (DBCC) economic managers, we recalibrated the government’s medium-term macroeconomic assumptions, fiscal program, and growth targets… the government’s revenue performance will continuously increase from P4.27 trillion (16.1% of GDP) in 2024 to P6.08 trillion (16.4% of GDP) in 2028… the fiscal deficit will decrease (from) 5.6% of GDP in 2024 to only 3.7% in 2028.”

Push for the privatization of some large government assets and corporations too, Mr. Recto. While higher revenues from higher GDP growth and more business activities will do this, revenues from privatization will greatly help and should be used entirely to reduce the public debt. Then tax revenues can be devoted to infrastructure instead of debt servicing for principal plus interest payments.

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com

Gov’t fully awards T-bills as yields drop

April 30, 2024 | 12:02 am

THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday as rates mostly decreased amid easing tensions in the Middle East and steady US inflation.

The Bureau of the Treasury (BTr) raised P15 billion as planned from the T-bills it offered on Monday as total bids reached P51.204 billion, or nearly thrice the amount on the auction block.

Broken down, the BTr borrowed P5 billion as programmed from the 91-day T-bills as tenders for the tenor reached P16.16 billion. The three-month paper was quoted at an average rate of 5.869%, 1.9 basis points (bps) lower than the 5.888% seen last week. Accepted rates ranged from 5.835% to 5.889%.

The government likewise made a full P5-billion award of the 182-day securities, with bids reaching P18.59 billion. The average rate for the six-month T-bill stood at 5.988%, down by 1.4 bps from the 6.002% fetched last week, with accepted rates at 5.97% to 6.013%.

Lastly, the Treasury raised P5 billion as planned via the 364-day debt papers as demand for the tenor totaled P16.454 billion. The average rate of the one-year debt inched up by 0.1 bp to 6.081% from the 6.08% quoted last week. Accepted yields were from 6.065% to 6.10%.

At the secondary market before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.9018%, 6.0201%, and 6.0508%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

T-bill yields mostly dropped week on week on Monday amid easing tensions between Iran and Israel, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Iran’s foreign minister said the crew of a seized Portuguese-flagged ship linked to Israel have been granted consular access and are expected to be freed, Iranian media reported on Saturday, Reuters reported.

Iran’s Revolutionary Guards seized the container vessel MSC Aries with a crew of 25 in the Strait of Hormuz on April 13, days after Tehran vowed to retaliate for a suspected Israeli strike on its consulate in Damascus. Iran had said it could close the crucial shipping route.

On Monday, Brent fell 0.9% to $88.70 a barrel, while US crude similarly edged 0.8% lower to $83.17 per barrel, as news of a potential Gaza ceasefire also eased fears of supply constraints.

A Hamas delegation will visit Cairo on Monday for talks aimed at securing a ceasefire, a Hamas official told Reuters on Sunday, as mediators stepped up efforts to reach a deal ahead of an expected Israeli assault on the southern city of Rafah.

“The awarded rates went lower today following the mild US PCE (personal consumption expenditures) inflation reading last Friday,” a trader said in an e-mail on Monday.

US monthly inflation rose moderately in March, but stubbornly higher costs for housing and utilities suggested the Federal Reserve could keep interest rates elevated for a while, Reuters reported.

The PCE price index increased 0.3% last month, matching the unrevised gain in February, the Commerce department’s Bureau of Economic Analysis said.

In the 12 months through March, inflation rose 2.7% after advancing 2.5% in February. The increase in inflation last month was broadly in line with economists’ expectations.

There had been fears that inflation could exceed forecasts in March after the release of the advance gross domestic product report for the first quarter on Thursday showed price pressures heated up by the most in a year.

The spike in inflation occurred in January. The PCE price index is one of the inflation measures tracked by the US central bank for its 2% target. Monthly inflation readings of 0.2% over time are necessary to bring inflation back to target.

Fed policy makers are expected to leave rates unchanged this week. The central bank has kept its benchmark overnight interest rate in the 5.25%-5.5% range since July. It has raised the policy rate by 525 bps since March 2022.

Excluding the volatile food and energy components, the PCE price index increased 0.3% in March after rising by the same unrevised margin in February. Core inflation increased 2.8% on a year-on-year basis in March, matching February’s advance.

Monday’s T-bill offering was the last for this month. The government raised P77 billion from the short-term papers in March, above the P75-billion program, as it upsized one auction award amid strong demand.

On Tuesday, the BTr will offer P30 billion in reissued 20-year Treasury bonds with a remaining life of seven years and two months.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.6% of gross domestic product this year. — A.M.C. Sy with Reuters

Urban living redefined by collaborative genius

April 30, 2024 | 12:02 am

The-Observatory-Sora-Tower-(Artist's-Perspective)-OL — The Observatory Sora Tower (Artist's Perspective)

In the bustling metropolis of Metro Manila, keeping up with the urban environment requires a blend of adaptability, resourcefulness, and a willingness to navigate the intricacies of living in a fast-paced city.

Utilizing its strong and equal Filipino and Japanese partnership, Federal Land NRE Global Inc. (FNG) aspires to be the market leader of the real estate industry while redefining urban living through its developments.

Fusing Japanese innovation with Filipino sensibility, FNG is guided by its sustainability principles and forward-thinking design in the development of its new projects. The joint venture between the Philippines’ Federal Land Inc. and Japan’s Nomura Real Estate Development brings carefully defined brand pillars and a visionary approach aiming to reshape urban living.

Well-thought-out design, architecture, and features are also integrated into FNG’s projects. The importance of Japanese identity in their property developments is underscored in their properties’ ample living spaces, modernized amenities, and nature-inspired landscapes.

As a company built on a partnership, collaboration lies at the heart of FNG’s successful ventures, enabling innovation, growth, and progress. Through shared expertise, resources, and vision, this partnership supersedes cultural and geographical boundaries, bringing together different perspectives and skills helpful in developing properties.

With FNG placing the people at the heart of its vision, they take a comprehensive approach to understanding people’s needs and striving to build sustainable urban communities that foster thriving families.

FNG’s masterplanned communities are designed to cater to every aspect of life. They offer residents the opportunity to live, play, socialize, work, and settle down, all within the confines of a carefully curated environment with convenient proximity to transportation hubs and employment opportunities

These features, amenities, and principles are all showcased in some of the company’s most noteworthy projects that embody a distinct vision for modern living and urban life. Through partnership and a commitment to excellence, these developments serve as examples of what collaborative efforts can achieve in redefining the landscape of urban living.

Yume at Riverpark, a residential neighborhood within Federal Land’s Riverpark community in General Trias Cavite, is a haven of Japanese inspiration tailored to starting families. This residential enclave fuses the Japanese culture and design with sensible Filipino family requirements. A diverse range of residential options, with lot sizes ranging from 300 to 527 square meters (sq.m.) ensure home-buyers find their ideal home within Riverpark’s thriving community.

For residents seeking an escape from the busy streets of Manila, Yume at Riverpark offers relaxing and rejuvenating features such as a wellness spa, a jacuzzi, and a sauna. For more active residents looking to break a sweat, outdoor fitness zones, multipurpose court, and jogging paths provide ample opportunities to engage in invigorating workouts.

Family-friendly amenities perfect for bonding are present in the township as well. Features such as their open lawn, multipurpose hall, function room, and lounges are perfect for family celebrations while their clubhouses, pocket parks, and kids’ play areas are enjoyable for children.

The Observatory in Mandaluyong City caters to the different preferences of its residents for a contemporary retreat from the metropolis. The property integrates modernity with an inviting retreat, promising a holistic urban living experience.

The 4.5-hectare mixed-use development is strategically located in close proximity to major Central Business Districts in the country. The Observatory in Mandaluyong will offer a spectrum of unit sizes spanning from compact studios at 28-33.5 sq.m. to expansive penthouses at 155.5-205 sq.m.

These noteworthy projects aspire to create a serene and rejuvenating environment for Filipinos to thrive in. The properties are also located in areas with escalating land values as evidenced by Colliers data, highlighting the area’s investment potential and offering residents not just a home, but a sound investment for the future.

FNG also has additional projects spanning various locations across the archipelago pipelined for the coming years. Developments in Cebu and the Manila Bay area are expected to usher in a new era of contemporary living in these locations.

From lavish amenities for relaxation and recreation to family-friendly spaces perfect for bonding, FNG properties provide a holistic living experience that brings their residences to the next level. With a commitment to connectivity, technology, and community-building, FNG is reshaping urban landscapes and fostering sustainable and thriving communities where residents can truly thrive.

As Federal Land and Nomura Real Estate Development continue their partnership under the banner of FNG, they remain dedicated to their shared vision of enhancing lives and redefining urban living, one development at a time.

To discover more about FNG and its projects, visit www.fng.ph.

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PCC clears JV between Mitsui and KDDI subsidiaries

April 30, 2024 | 12:02 am

THE Philippine Competition Commission (PCC) on Monday said the proposed joint venture (JV) between Mitsui & Co., Ltd. and KDDI Corp. subsidiaries does not pose a competition threat in the relevant market.

The joint venture between Mitsui’s Relia, Inc. and KDDI’s KDDI Evolva will not result in “substantial lessening, restriction, or prevention of competition in the relevant market,” the PCC said in a statement, citing a decision dated April 13, 2023.

If realized, the joint venture will result in the merger of Relia and KDDI Evolva, with KDDI Evolva as the surviving entity.

Relia specializes in business process outsourcing services, while KDDI Evolva offers information and communications technology solutions.

“The joint venture aims to combine Mitsui’s strategic capabilities with KDDI’s telecommunications expertise, focusing on digital solutions and innovation in areas such as contact center services and IT solutions through KDDI Evolva, the resulting entity,” the PCC said.

The PCC said that it has assessed the provision of Secure Access Service Edge (SASE) for integrated network solutions on a global scale as the relevant market for the transaction.

This solution, the PCC said, keeps networks safe and connected by using security tools like firewalls and networking technology to let people access applications and data securely anywhere.

“While there is a vertical relationship between the parties involving the resale of SASE licenses, this relationship does not significantly impact competition due to the presence of alternative providers and services in the market,” the PCC added.

Under the Philippine Competition Act, the PCC is mandated to review mergers and acquisitions to ensure fair market competition. — Justine Irish D. Tabile

Hybrid work, new supply to drive 22% office vacancy rate this year — JLL

April 30, 2024 | 12:02 am

HYBRID working arrangements and new office spaces are expected to contribute to a 22% vacancy rate by the end of the year, according to JLL Philippines.

“By end 2024, what we forecast for vacancy levels is to reach around 22% and the reason for that is to expect an additional 500,000 square meters (sq.m.) of all stock on demand,” JLL Philippines Head of Research and Strategic Consulting Jan-Loven C. de los Reyes said during a press briefing on Thursday last week.

“That would apply supply pressure on the market, considering that we have heavy vacancy levels that are in the double digits across cities,” he added.

JLL said the first quarter vacancy level eased to 19.9% from 20.3% in the fourth quarter of 2024.

However, this vacancy level is still higher than 17.8% in 2023.

According to Mr. De los Reyes, overall, this was due to the reduction in new supply, coupled with a good take-up rate of around 75%. Manila had the highest vacancy rate at 38.1%, followed by Parañaque at 50.4%, and the lowest in Bonifacio Global City at 9.1%.

He also noted a “double whammy” that contributes to the high vacancy level, citing the exit of the Philippine Offshore Gaming Operators and the emergence of hybrid work arrangements.

JLL projected approximately 582,234 sq.m. of stock for the end of 2024, followed by 456,219 sq.m. in 2025, and 227,749 sq.m. in 2026. Additionally, there will be 43,066 sq.m. for both 2027 and 2028.

Regarding take-up, JLL noted a rise in leasing volumes to 149,172 sq.m. in the first quarter from 81,785 sq.m., attributed to the spillover of deals from the fourth quarter of 2023.

But year on year, this was slower and fell by 30% to 213,707 sq.m. The cities of Taguig and Makati led the transaction activities.

Per sector, the share of business process outsourcing (BPO) in total leasing activity stands at 68.9%, while corporate occupiers account for 31.1%.

Mr. De los Reyes said leasing volumes are anticipated to remain moderate over the next quarters but are still significantly below the levels seen during the pandemic.

He noted that the easing conditions are due to office demand being tempered by hybrid working.

“Select BPO companies have been releasing spaces but have not taken out additional spaces by improving their headcount,” he said. “There are also going to be companies who are taking up space, keen to have employees return to the office, and this may come from the financial services segment.”

For the first quarter, JLL said the released office space rose to 97,365 sq.m.

The BPO sector pullout in Muntinlupa City amounted to 3,400 sq.m., while the corporate occupier pullout in Taguig City totaled 1,000 sq.m.

JLL also said that Metro Manila’s overall rents remained unchanged at P1,004 per sq.m. in the first quarter. — Aubrey Rose A. Inosante

Republic Glass Holdings Corp. to hold regular annual meeting of stockholders on May 21

April 30, 2024 | 12:01 am

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Aerosmith frontman Steven Tyler wins dismissal for good of sexual assault lawsuit

April 30, 2024 | 12:01 am

NEW YORK — A federal judge in Manhattan dismissed for good a lawsuit accusing Aerosmith lead singer Steven Tyler of sexually assaulting a former teenage model twice in one day in the mid-1970s.

US District Judge Lewis Kaplan said Jeanne Bellino cannot recover damages from the 76-year-old Tyler under a 2000 New York City law protecting victims of gender-motivated violence.

He said it would be futile to file an amended complaint, and dismissed Ms. Bellino’s case with prejudice, meaning it cannot be brought again. Mr. Kaplan rejected an earlier complaint in February.

Lawyers for Ms. Bellino did not immediately respond to requests for comment.

Mr. Tyler had “vehemently” denied Ms. Bellino’s allegations, which included that he assaulted her in a phone booth as others in his entourage stood by laughing, and later assaulted her in a hotel.

The alleged assaults occurred in the summer of 1975, when Ms. Bellino was 17and Mr. Tyler was 27.

Ms. Bellino said she encountered Mr. Tyler after a friend arranged for her to meet Aerosmith following a Manhattan fashion show.

Mr. Kaplan said the city law was not retroactive, and that Ms. Bellino’s battery claim would have expired on her 19th birthday.

He also said two more recent state laws, the Adult Survivors Act and Child Victims Act, did not revive Bellino’s claim.

The judge said the first law covered only people who were at least 18 when they become victims, and the second did not cover claims filed after August 2021. Ms. Bellino sued in November 2023.

David Long-Daniels, a lawyer for Mr. Tyler, in an e-mail said Mr. Kaplan “fastidiously applied the facts to the law. That is all we can ask from any judge. We are particularly happy for Steven and his family.”

Mr. Tyler has also defended against a lawsuit in Los Angeles, where the plaintiff Julia Misley claimed he sexually assaulted her in 1973 when she was 16 and he was 25.

Ms. Bellino’s law firm has represented Ms. Misley in that case. — Reuters

Australia’s solar, wind energy needs no threat to farmland

April 30, 2024 | 12:01 am

solar panels-worker — BILL MEAD-UNSPLASH

As Australia’s rapid renewable energy rollout continues, so too does debate over land use. Nationals Leader David Littleproud, for example, claimed regional areas had reached “saturation point” and cannot cope with more wind and solar farms and transmission lines.

So how much land is needed to fully decarbonize energy in Australia? When we switch completely to solar and wind, do we have the space for all the panels, turbines, and power lines?

I’ve done the sums. All we need is 1,200 square kilometers. That’s not much. The area devoted to agriculture is about 3,500 times larger at 4.2 million square kilometers. The area of land that would be taken away from agriculture works out at about 45 square meters per person — about the size of a large living room.

We can ditch fossil fuels and reduce greenhouse emissions with negligible impact on agriculture. And in many cases, farmers can be paid for hosting renewable energy infrastructure while continuing to run sheep and cows or grow crops.

THE CHALLENGE OF THE ENERGY TRANSITION
Electricity consumption in Australia is currently about 10 megawatt-hours (MWh) per person per year.

Decarbonizing Australia’s economy will require electrifying many technologies that currently derive their power from burning fossil fuels. Then we need to ensure the electricity grid runs entirely on renewables.

When we electrify transport, heating, and industry, annual electricity consumption per capita doubles. But we will need even more electricity to decarbonize aviation and shipping. So it’s reasonable to assume electricity consumption must triple if we are to complete decarbonization, to 30 MWh per person per year.

This would logically be achieved in three stages, starting with the easiest to achieve:

Stage 1: Solar and wind displace coal and gas from the electricity system. The federal government target of 82% renewable electricity by 2030 puts us firmly on track to decarbonize electricity. This trend is already well underway.

Stage 2: Clean electricity is used to electrify transport (electric vehicles), heating (electric heat pumps), and industrial heat (electric furnaces). This off-the-shelf technology could largely replace petrol and gas within a decade with negligible impact on the cost of running vehicles and heating homes.

Stage 3: The chemical industry is decarbonized. Clean electricity is used to make ammonia, iron, steel, plastics, cement, and synthetic aviation and shipping fuel.

WHERE WILL THIS CLEAN POWER COME FROM?
Virtually all new generation capacity in Australia over the past decade has been in solar and wind. Together, solar and wind have risen from about 6% of electricity generation in 2014 to 33% today. Solar and wind provide the cheapest electricity.

Most solar power in Australia today comes from rooftop solar panels. These panels don’t require any extra land. But the area of rooftop is limited. In coming years, ground-mounted solar farms will become ever more important.

We’ll also need more wind farms. Each wind farm contains dozens of turbines and spans dozens of square kilometers. But only a small fraction of the land is lost to farming.

And it’s best to spread the solar farms and wind farms throughout the settled areas of Australia, to reduce the effect of local cloud and wind lulls.

Most solar and wind farms are located on sheep and cattle farms inland from the Great Dividing Range. Here there is plenty of sun and wind, and it’s not too far away to transmit electricity to the cities via high-voltage power lines.

SO HOW MUCH LAND DO WE NEED?
Typically, only about 1% of land covered by a windfarm is actually lost to farming. In most cases, farmers run livestock or continue cropping around the turbine towers and access roads.

Similarly, because solar panels are spaced apart, the area spanned by a solar farm is often two to three times the actual area of the panels themselves.

The panels are typically spaced to avoid losses from shading. As an added bonus, it means rain and sunlight can fall between them, allowing grass to grow and livestock to graze and shelter.

About 10,000 km of new transmission lines will also be required for the energy transition. This sounds like a lot but amounts to just 37 centimeters per person.

Again, the area of land that would be taken away from agriculture for wind turbine towers and access roads is relatively small.

A further small area of land will be dedicated to new storage such as pumped hydro power and batteries.

The total area spanned by the solar farms, wind farms, and all the other infrastructure is about 22,000 square km (mostly the land between the turbines in windfarms). But agriculture could continue largely as normal on most of this land.

By my calculations, the total area taken away from agriculture to power a 100% renewable energy (zero fossil fuel) economy is about 45 square meters per person. Considering Australia’s total population of 27 million people, that means the total land area required is 1,200 square km. The area currently devoted to agriculture is about 3,500 times larger than this.

FARMERS CAN EARN EXTRA INCOME
Mining companies are often permitted to mine land without the consent of the landowner.

Solar and wind farm developers do not have the same rights. They must agree on lease fees with landowners before gaining access to land. These fees are typically tens of thousands of dollars per year per turbine.

In the case of transmission lines, hosts in Victoria are paid A$200,000 per kilometer over eight years.

The transition to renewable energy has attracted opposition from some residents living near proposed infrastructure. But this can be overcome.

Successful solar and wind farm companies gain community acceptance through genuine transparency, particularly early in the project, to ensure no information vacuum is created and then filled with misinformation.

Paying neighbors as well as the renewable energy host farm, and establishing community funds, is also helpful.

PLENTY OF LAND TO SHARE
The expansion of renewable energy infrastructure will be concentrated in Australia’s regional areas. But we can also expect new energy capacity from elsewhere, such as expanded rooftop solar and new offshore wind farms, which reduces the amount of land needed for the energy transition.

The location of good areas for solar and wind farms is shown in the Australian National University’s renewable energy heatmaps, which takes account of the solar and wind resources, proximity to transmission lines, and protected land. Farmers in areas colored red can command higher prices for leasing land to solar and wind farm companies.

In short, Australia has far more than enough land to host the solar farms and wind farms required for the renewable energy revolution.

Andrew Blakers is a professor of Engineering, Australian National University.

D&L says fixed-rate bonds maintain highest credit rating

April 30, 2024 | 12:01 am

LISTED D&L Industries, Inc. said it has retained its highest credit rating for its P5-billion fixed-rate bonds.

The fixed-rate bonds maintained a PRS Aaa rating with stable outlook from the Philippine Rating Services Corp. (PhilRatings), D&L Industries said in a stock exchange disclosure on Monday.

Issued in September 2021 to partly fund the company’s Batangas plant, D&L’s bond issuance had a principal amount of P3 billion, with an oversubscription option of up to P2 billion, and a tenure of three to five years.

PRS Aaa is the highest rating issued by PhilRatings and is given to obligations with minimal credit risk, while a stable outlook is assigned when a rating is likely to be maintained in the next 12 months.

The rating and outlook were given based on D&L’s market position in the industries in which it operates; diversification of products offered and markets served; and specialty products that shield the company from competition and ensure continued demand from customers.

PhilRatings also cited the company’s relatively stable margins amid higher costs and expenses, including incremental costs on the Batangas expansion facility, as well as conservative debt management and adequate cash flow generation.

D&L is expected to settle its P3 billion fixed-rate bonds upon maturity on Sept. 14.

“Given its conservative leverage position, as well as its profit and cash flow performance, the company is seen to be able to comfortably service its maturing obligations,” it said.

The company’s Batangas plant started commercial operations in July 2023.

“As the economy continues to recover from the pandemic, D&L is positive that it is more capable to withstand adverse environments with the expertise it has learned through its years of operations. The company strives to enhance its capabilities in order to maintain a strong market position,” it said.

D&L is engaged in the production of customized food ingredients, specialty raw materials for plastics, and oleochemicals for personal and home care use.

On Monday, D&L shares fell by 0.65% or four centavos to P6.10 apiece. — Revin Mikhael D. Ochave

Turnover of Sierra Valley’s first 2 towers eyed for 2025

April 30, 2024 | 12:01 am

RLC RESIDENCES said it expects the turnover of the first two towers of its four-tower Sierra Valley Gardens (SVG) project – Phase 1 in Rizal by 2025.

The Sierra Valley Gardens in Cainta is a high-rise residential project that spans three phases along Ortigas Avenue Extension.

“We expect turnover to begin by mid-2025,” said Robinson Land Corp. Chief Marketing Officer John Richard B. Sotelo in an e-mailed statement on Monday, referring to the first two buildings of Phase 1 launched in 2020.

Mr. Sotelo also said that Buildings 3 and 4 of Phase 1 are “on track as per the original construction schedule” and are almost sold out.

RLC Residences plans to launch Phase 2 and Phase 3 according to market demand and readiness, he added.

In a media release last week, the company said it conducted SVG’s topping-off ceremony for the first two buildings.

The company said the project was its fastest-selling condominium property due to its location inside the Sierra Valley Estate in Cainta, Rizal, minutes away from Ortigas central business district.

“There are so many things to look forward to in this project — the convenience of living in well-designed units that they can call home, where the amenities for leisure, recreation, and wellness are at their fingertips,” RLC Residence Marketing Head and Chief Integration Officer Karen Cesario said.

Sierra Valley Gardens is described as the first smart suburban community in Cainta, Rizal.

It offers studio to two-bedroom units with balcony options.

The amenities include the clubhouse façade, function room, gym, children’s playroom, jogging trail, adult and children swimming pool, multi-purpose court, and outdoor play area. — Aubrey Rose A. Inosante

UnionBank Q1 profit slides 40% after Citigroup integration

April 30, 2024 | 12:01 am

UNION BANK of the Philippines, Inc. (UnionBank) booked a net income of P2.011 billion in the first quarter, with expenses related to its integration of Citigroup, Inc.’s local consumer business into its operations affecting its profit, it said on Monday.

The bank’s net income last quarter was down by 39.79% from the P3.34-billion attributable net profit that it booked in the comparable year-ago period, based on its unaudited financial report for the first quarter of 2023.

UnionBank’s latest financial statement was unavailable as of press time.

“The bank allocated resources towards the migration of the acquired Citi consumer business into UnionBank systems. While this temporarily affected our profitability, it was a planned initiative aimed at unlocking long-term benefits and efficiencies,” the lender said in a disclosure to the stock exchange.

UnionBank completed the integration’s final phase on March 24, it said.

“Our first-quarter performance is in line with our expectations. We are even ahead in terms of key metrics that matter for sustainable growth, such as number of retail customers, net interest margins, and fees-to-assets. Now that we have successfully completed the Citi migration, we will no longer bear the one-time costs associated with it starting this month.

We will now focus our efforts to realizing the full gains from cross-selling to our growing customer base,” UnionBank Chief Financial Officer Manuel R. Lozano said in a statement.

The bank’s net interest income grew by 17% year on year to P13.45 billion in the first quarter. Its net interest margin went up by 59 basis points to 5.7%. Meanwhile, other income stood at P4.905 billion.

Its revenues grew by 14% year on year, supported by the growing share of consumer loans in its portfolio, higher margins and income from transaction fees.

“The bank’s consumer loans now account for 59% of total loan portfolio, nearly three times higher than industry average,” UnionBank said.

Meanwhile, its operating expenses went up by 10% to P11.083 billion in the first quarter due to costs related to the migration of Citi’s retail accounts into UnionBank’s systems.

“A one-time integration cost of P1.1 billion was incurred in the first quarter of 2024,” it said.

“Additionally, the bank’s marketing investments resulted in a significant increase in new-to-bank credit card customers, more than doubling last year’s customer acquisition rate. We now have a bigger base of customers who we can offer our other products and services to,” UnionBank added.

The bank’s loans stood at P520.758 billion in the first quarter. On the funding side, its deposits were at P692.114 billion, with its low-cost current account, savings account or CASA deposits at P431 billion.

Total assets stood at P1.146 trillion at end-March. Total capital funds were at P174.589 billion.

UnionBank’s shares declined by P2 or 4.84% to close at P39.35 apiece on Monday. — A.M.C. Sy