NGCP taps banks for $1.5-billion IPO

March 17, 2021 | 12:01 am

NATIONAL Grid Corp. of the Philippines (NGCP) has picked banks to work on its initial public offering (IPO) and has increased its targeted size to at least $1.5 billion, according to people with knowledge of the matter, paving the way for the biggest listing in the nation’s history.

The high-voltage electricity network operator, commonly known as NGCP, has selected Bank of America Corp., JPMorgan Chase & Co., and UBS Group AG to work on the first-time share sale, said the people, asking not to be named as the process is private. It may also add other banks to help with the listing, they said.

The company aims to raise about $1.5 billion from the IPO though the figure could go as high as $2 billion, the people said. NGCP is seeking a valuation of $8 billion to $10 billion from the share sale, which could happen as soon as the fourth quarter, the people said.

At $1.5 billion, which is higher than Bloomberg News had previously reported, NGCP’s IPO will be the biggest ever in the Southeast Asian nation, surpassing the $1.3 billion Monde Nissin Corp. is seeking to raise in its upcoming first-time share sale. Robinsons Retail Holdings, Inc.’s, which raked in $621 million in 2013, is the largest in the Philippines to date, according to data compiled by Bloomberg.

Deliberations are ongoing and details of the offering such as size and timing could still change, the people said. Representatives for Bank of America, JPMorgan, NGCP and UBS declined to comment.

NGCP reached out to bankers to submit proposals for the prospective listing early this year, Bloomberg News reported in January.

Under a law signed in 2008 that granted NGCP the franchise, the network operator is required to make a public offering of at least 20% of its outstanding capital within 10 years from the start of operation.

NGCP was created as the result of a consortium including State Grid Corp. of China winning the 25-year concession to run the nation’s power transmission network in 2007. The company also counts Synergy Grid & Development Phils, Inc. President Henry Sy, Jr. and Prudential Guarantee & Assurance, Inc. chairman Robert Coyiuto, Jr. as shareholders.

The power network operator officially started in 2009, according to its website. It has over 21,000 kilometers of transmission lines, 20,000 transmission towers and 140 substations.

The IPO plan comes after the Energy Regulatory Commission denied NGCP’s request to further extend the deadline for the share sale. Senator Sherwin T. Gatchalian urged the watchdog in October to issue an ultimatum on NGCP to comply with the requirement. — Bloomberg

How essential is manufacturing to the economy?

March 17, 2021 | 12:00 am

How PSEi member stocks performed — March 16, 2021

March 17, 2021 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Tuesday, March 16, 2021.

Peso declines vs dollar on cautious trade ahead of Fed

March 16, 2021 | 9:00 pm

THE PESO continued to weaken against the greenback on Tuesday, reflecting cautious sentiment in market as seen in the local bourse and ahead of the policy-setting meeting of the US Federal Reserve.

The local unit closed at P48.635 per dollar on Tuesday, depreciating by 9.5 centavos from its Monday finish of P48.54 against the greenback, data from the Bankers Association of the Philippines showed.

The peso started Tuesday’s trading session at P48.55 versus the dollar. Its weakest showing was seen at P48.66 while its intraday best was at P48.51 against the greenback.

Dollars traded went down to $721.9 million on Tuesday from $798.55 million the prior day.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso’s weakness reflects cautiousness among investors that was also seen in the local bourse.

“The peso was weaker as the local stock market remains among four-month lows despite modest gains,” Mr. Ricafort said in a text message.

The Philippine Stock Exchange index rose by 6.62 points or 0.1% to finish at 6,559.08 on Tuesday after government officials said they have acquired some 30 million doses of a coronavirus disease 2019 (COVID-19) vaccine.

Meanwhile, a trader attributed the peso’s depreciation to the market’s anticipation of the US Federal Reserve’s latest policy decision.

The Federal Open Market Committee will review its stance on March 16-17. The Fed has maintained policy rates near zero in the past year. Fed policy makers are expected this week to forecast that the US economy will grow in 2021 at the fastest rate in decades, with unemployment falling and inflation rising, as the COVID-19 vaccination campaign gathers pace and a $1.9-trillion relief package washes through to households, Reuters reported.

For today, Mr. Ricafort gave a forecast range of P48.60 to P48.70 per dollar while the trader expects the local unit to move within the P48.55 to P48.75 band. — LWTN with Reuters

Shares inch up as gov’t seals new vaccine deal

March 16, 2021 | 9:00 pm

PHILIPPINE SHARES inched up on Tuesday after government officials said they have acquired some 30 million doses of a coronavirus disease 2019 (COVID-19) vaccine.

The benchmark Philippine Stock Exchange index (PSEi) rose by 6.62 points or 0.1% to finish at 6,559.08 on Tuesday. The broader all shares index likewise increased by 4.28 points or 0.1% to 3,954.15.

“Philippine shares [reversed earlier] losses… to close in the green as news reports say the government signed a supply deal for 30 million Novavax doses. Speculation is now arising as to how soon these said vaccines will arrive,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Meanwhile, sentiment also got a boost as investors grew optimistic about the economic reopening from the pandemic worldwide,” Mr. Limlingan added.

Facing criticisms about a slow-moving vaccination drive, vaccine czar Carlito Galvez, Jr., who is also the chief enforcer of the state’s anti-coronavirus efforts, said more doses should arrive soon, Reuters reported.

Nearly 2.4 million doses are expected by early April, comprising 979,200 doses of AstraZeneca’s vaccine through the COVAX facility and 1.4 million Sinovac shots including 400,000 donated by China, he said.

The government has also signed an agreement with the Serum Institute of India for 30 million Novavax vaccine doses, due to arrive in the third or fourth quarter of the year, said Mr. Galvez.

AB Capital Securities, Inc. Junior Equity Analyst Lance U. Soledad, meanwhile, said the local bourse was unable to hold on to earlier gains as investors continue to look for fresh leads.

“The market was not able to sustain its rally for the session and closed flat amid lack of positive catalyst,” Mr. Soledad said in a separate Viber message.

Most sectoral indices improved on Tuesday, except for holding firms, which declined by 62.44 points or 0.92% to 6,687.56; and property, which slumped by 4.15 points or 0.12% to close at 3,279.56.

Meanwhile, financials gained 24.05 points or 1.75% to end at 1,398.35; industrials went up by 98.78 points or 1.17% to 8,501.37; services added 12.83 points or 0.9% to close at 1,425.21; and mining and oil climbed by 30.75 points or 0.36% to 8,471.53.

Value turnover decreased to P5.9 billion on Tuesday with 3.3 billion shares switching hands, lower than the P9.23 billion with 5.56 billion shares that were traded on Monday.

Advancers beat decliners, 118 against 97, while 41 names closed unchanged.

Net foreign selling dropped to P298.84 million on Tuesday from the P1.12 billion seen on Monday.

AB Capital Securities’ Mr. Soledad sees the local bourse trading sideways for now.

“We expect [the support to be] at 6,500 and 6,450 and resistance at 6,600 and 6,800,” he said. — Keren Concepcion G. Valmonte with Reuters

Nickel prices to come off highs in 2021, Fitch Solutions says

March 16, 2021 | 7:56 pm

NICKEL PRICES are expected to come off current highs in 2021 as more supply becomes available to the market, but will be underpinned by recovering economies, Fitch Solutions Country Risk and Industry Research said.

In a report, Fitch Solutions upgraded its 2021 average nickel ore price forecast to $15,750 per ton, from $15,250 previously.

“Prices over the past few months have progressed to multi-year highs on the back of increased optimism in the market, a weakening dollar and bullish expectations about nickel supply,” Fitch Solutions said.

According to Fitch Solutions, the current nickel price is about $18,180 per ton, but will drop as supply increases in key markets.

“The end of the rainy season in the Philippines will allow the resumption of nickel mining activity to feed nickel pig iron (NPI) facilities in China, its dominant nickel ore trading partner,” Fitch Solutions said.

“We are maintaining our bearish outlook on prices in 2021 compared with the year-to-date average of $18,140 per ton as increasing supply over the year reduces the market deficit, maintaining lower prices,” it added.

Over the long term, Fitch Solutions sees nickel prices remaining on a gradual uptrend with the global market remaining undersupplied.

It said demand is expected to be sustained due to continued growth in domestic construction and autos industry production in China.

“We forecast China’s construction sector to grow by an average of 3.8% year on year over 2021-2029 while vehicle production grows by an average of 1.2% over the same period. The rise in demand will exceed production growth in the short term, underpinning a prolonged deficit in the market and push prices higher,” Fitch Solutions said.

Fitch Solutions also projected that the electric vehicle (EV) market will create more nickel demand due to the need for batteries enabling longer range.

“We expect this trend to begin taking hold over the coming years as consumers favor EVs with longer driving distance capabilities before recharging, making nickel-based battery compositions the optimal choice for vehicle producers,” Fitch Solutions said.

Asked to comment, Chamber of Mines of the Philippines Chairman Gerard H. Brimo said in a mobile phone message that the industry could benefit from policy changes that will allow the Philippines to service demand from electric vehicle battery makers.

“While the Philippines is a top nickel ore producer, we only have two processing plants that produce nickel and cobalt sulfide concentrates — intermediate products that are further processed in Japan to make electric vehicle (EV) batteries,” Mr. Brimo said.

According to Mr. Brimo, the two plants are run by Coral Bay Nickel Corp. in Palawan and Taganito HPAL Nickel Corp. in Surigao del Sur.

“To enable our country to become a fully integrated EV battery supplier, certain policy changes have to be made, among them the lifting of the moratorium on new mining projects that has been in place for nearly a decade,” Mr. Brimo said.

“The industry needs full government support in terms of stable mining and investment policies that do not change mid-stream,” he added.

The value of the metallic mining industry’s output in 2020 rose 1.13% year on year to P132.21 billion, according to the Mines and Geosciences Bureau (MGB).

The MGB said nickel ore and its by-products accounted for 51.8% or P68.48 billion. The volume of direct-shipping nickel ore — the form in which the metal is exported for processing overseas — rose 3.3% year on year to 333,962 metric tons (MT).

Meanwhile, production of mixed nickel–cobalt sulfide fell 2.9% year on year to 49,647 MT. — Revin Mikhael D. Ochave

ASF state of emergency recommendations to include P1-B indemnity fund

March 16, 2021 | 7:56 pm

THE GOVERNMENT is awaiting recommendations on measures to be pursued in conjunction with a state of emergency declaration to address African Swine Fever (ASF), which are expected to include a P1-billion fund to indemnify farmers whose hogs have had to be culled.

The Department of Agriculture (DA) is currently drafting proposals to more readily mobilize public funds to address ASF, which has drastically reduced hog numbers and is threatening to send inflation even higher, the Presidential Spokesperson Herminio L. Roque, Jr. said at a televised briefing.

“We welcome that (proposal) and dina-draft na po ng DA ang communication sa (the DA is drafting a communication to) Malacañang suggesting precisely this,” Mr. Roque said. “Hinihintay po ng Malacañang ‘yan para po mapirmahan at mapatupad (The Palace is waiting for the draft for signing and implementation).”

Mr. Roque said the recommendations will generally empower local governments in launching programs to minimize the impact of ASF on hog raisers. They will also require local governments to set aside funds specifically to address the hog industry’s recovery.

The DA has said the disease has affected more than 68,000 farmers in 40 provinces across 12 regions and has resulted in the culling of about 442,000 hogs.

Hog culls have led to increasing pork prices in Metro Manila public markets and in nearby areas, prompting President Rodrigo R. Duterte last month to impose price controls on pork and chicken.

At the briefing, Mr. Roque said Agriculture Secretary William D. Dar still enjoys the trust and support of the President.

“(Cabinet members) continue to work or remain in our duties for as long as the President has full trust and confidence in us. Ganoon din po ang sitwasyon ni Secretary Dar (That is also the situation with Secretary Dar).” — Kyle Aristophere T. Atienza

NEDA says water department to serve as private sector investors’ main gov’t partner

March 16, 2021 | 7:56 pm

THE Department of Water Resources (DWR) needs to be established to better deal with private-sector investors and to unify the management of more than 30 agencies involved in water resources, an economic planner said.

Roderick M. Planta, National Economic and Development Authority (NEDA) assistant secretary, said at a virtual briefing Tuesday that a DWR would be the private sector’s designated partner in developing water resources.

“The private sector’s behavior is largely dictated by how the government operates. The regulatory environment is crucial to their investments,” Mr. Planta said, adding that in aid of clear regulation, a consolidation in the water agencies will unify overall planning, programming, and policy formulation.

Representative Jose Ma. Clemente S. Salceda, who chairs the technical working group associated with the House bills proposing to create the DWR, said such a department will be responsible for ensuring access to clean water and sanitation services.

Mr. Salceda, said the proposed department will also encourage responsible private-sector participation and can facilitate infrastructure building within the industry by declaring projects to be of national significance.

“National interest gives these projects a special place in our legal framework,” Mr. Salceda said, referring to the facilitated permit process for projects enjoying such status.

Mr. Salceda said government investment in water will remain needed, but pursued in partnership with the private sector.

“Public investment is necessary in this sector, especially considering that 70% of water is for agriculture. Food security is a basic national interest. The absence of public investment in water may distort the pricing of some basic needs,” Mr. Salceda said.

“Water resource management cannot be disjointed. It is one resource where you are not allowed to make mistakes in one stage of management,” he added. — Revin Mikhael D. Ochave

Overlapping regulation seen dampening growth in water sector

March 16, 2021 | 7:56 pm

THE Philippine Institute for Development Studies (PIDS) said overlapping and sometimes conflicting regulation of the water sector is holding back the industry’s growth.

In a policy note, “Regulatory and investment coordination issues in the Philippine water sector,” PIDS said the Philippines’ water agencies often fail to coordinate policy planning, data monitoring data, and infrastructure programs.

“There are inconsistencies in the technical operating standards that regulatory agencies require, resulting in nonuniform levels of service across the country,” PIDS said.

It cited conflicting technical and economic regulations of the two main regulators for water service providers: the Local Water Utilities Administration (LWUA) and the National Water Resources Board (NWRB).

Adopting the NWRB’s regulatory practices will harmonize tariffs across water service providers, PIDS said, but it also noted that local government units (LGUs) and water districts are concerned about their ability to comply with the NWRB’s technical regulations.

It said the LWUA also holds legal authority to regulate its part of the water sector and ceding such authority may constitute a violation of the law.

It said the LWUA lacks specific guidelines for technical and tariff regulations that apply to Rural Water Supply Associations, PIDS said.

“There are varied technical standards across regulators with some missing critical standards like water pressure, customer feedback, and efficiency measures. There are also non-aligned standards like non-revenue water targets and water availability,” it said.

“These inconsistencies affect the quality and delivery of the water service,” it added.

The lack of a clear and consistent technical benchmark for operating costs can result in inefficient delivery and wasted resources, with consumers burdened by the extra charges through high water rates.

PIDS said the government has no single office overseeing water service delivery nationwide since the Department of Environment and Natural Resources and NWRB are only concerned with resource management and development, while LGUs and private entities provide water for household consumption.

“This calls for a more coordinated local and regional planning on water supply infrastructure to improve water service,” it said.

“The fragmented structure results in multiple water supply utilities operating in the same areas, making some water supply investments redundant,” it added.

Roughly 88% of the population had access to water in 2015, PIDS said, citing official estimates, leaving 12.4 million persons without access.

Around 44% have piped household connections, 11% relied on communal faucets and 45.2% were dependent on point sources like shallow wells. Only 27% of 21,972 water service providers across the country maintain a Level III water supply facility, which include a piped distribution network, a treatment system and household taps.

To address these issues, PIDS said regulatory mandates and varying rules should be clarified and regulations streamlined to make water rate-setting formulas balanced. Legislation can consolidate these various regimes.

There should also be unified technical regulations and operating standards, it said.

A single coordinating body monitoring performance, investment and funding needs of water supply service providers will also be needed to prevent investment redundancy in any given area, it said. — Beatrice M. Laforga

Food security strategy to consider imports a ‘last resort’ measure

March 16, 2021 | 7:56 pm

THE food security strategy for 2021 will involve addressing local shortages and surpluses by transporting commodities across regions, and diversifying staple foods, the Department of Agriculture (DA) said, with imports to be shipped in as a last resort.

Speaking at the Asia CEO Forum Tuesday, Agriculture Secretary William D. Dar said the primary task remains to increase production.

“What we are doing is to elevate the levels of food production in most of the commodity industries that we have. Whatever will be the deficiency… will be sourced from outside,” Mr. Dar said.

He added support is needed to unlock the potential of the sector and improve its contribution to the country’s gross domestic product, which is currently at 9%.

“There are many employment opportunities to be created in the sector. One-third of the country’s jobs are in agriculture. If we sustain that and increase the various agricultural enterprises, more and more people will be employed as well,” Mr. Dar said.

According to the Philippine Statistics Authority, the value of farming output contracted by 1.2% in 2020, against a 0.3% rise a year earlier.

The contraction was the first decline since 2016, when output dropped 1.5%.

Mr. Dar has said the DA is targeting 2.5% output growth in 2021. — Revin Mikhael D. Ochave

UN notes regional regression in achieving sustainable dev’t goals

March 16, 2021 | 7:56 pm

SOUTHEAST ASIA is regressing in its effort to meet its sustainable development goals (SDGs) relating to climate action, ocean health, and ensuring peace and justice, according to the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

ESCAP issued its findings in its annual SDG progress report.

It said greenhouse gas emissions of many countries in the region have been increasing, which has also been experiencing “the worsening quality of oceans and slow progress in managing marine protected areas.”

“Southeast Asia is regressing on all measurable targets under peace, justice and strong institutions. The subregion needs to urgently reverse current trends on intentional homicide, unsentenced detainees and victims of human trafficking,” ESCAP added.

It said the region needs to make more progress in creating a sustainable energy sector, noting that other parts of the Asia-Pacific are making more progress in terms of installed renewable energy generating capacity.

Southeast Asia, however, was cited by ESCAP as “well-positioned” to achieve SDG nine, which aims to promote sustainable industry and innovation.

According to ESCAP Statistics Division Director Gemma Van Halderen, the region was not hitting its 2020 milestones for the 17 SDGs even before the pandemic.

“On its current trajectory, less than 10% of the SDG targets are on track to be achieved by 2030,” Ms. Halderen said during a virtual briefing on Monday.

“The biggest progress was on good health and well-being, and industry, innovation and infrastructure, but challenges remain. The most alarming are regressing trends on climate action and life below water,” she added.

ESCAP said coronavirus disease 2019 (COVID-19) will likely have an impact on health, basic services, jobs, and community resilience in the Asia Pacific, which will pose challenges to poverty eradication and achieving sustainable development by 2030.

It said the results of its 2021 report are not comparable with previous reports since “a revised set of SDG indicators and updated historical data” are used for the analysis every year.

On Tuesday, ESCAP also announced the launch of a National SDG Tracker that will allow countries to track and assess their progress on SDGs.

“Countries can take advantage of the wealth of data already available in the Asia-Pacific SDG Gateway, customize indicator sets, update data and set national targets. The National SDG Tracker also makes it possible to use disaggregated data so no one is left behind,” ESCAP said. — Angelica Y. Yang

Daily infections may hit 11,000 by end-March

March 16, 2021 | 7:30 pm

CORONAVIRUS infections may hit a daily record of 11,000 by end-March, according to researchers from the country’s premier university, putting pressure on the government to fast-track its vaccination drive.

The OCTA Research Group from the University of the Philippines on Tuesday cited a spike in cases, with a virus reproduction rate of 2.03. This means a sick person may infect two more people.

The spike started in the cities of Pasay, Malabon and Navotas and has now spread to other cities in the capital region, OCTA research fellow Fredegusto Guido P. David told the ABS-CBN News Channel.

He said at the start of the week the daily tally could hit 8,000 by the end of the month.

“The increase in cases is not just happening now in the National Capital Region but it’s also happening in many areas in Calabarzon like Rizal, Cavite and parts of Bulacan,” he said. “There’s also another uptick in Cebu City.”

He said cases in cities where the outbreak started were now slowing down.

The spike could be traced to increased mobility, failure to comply with minimum health standards and the detection of the more contagious coronavirus variants in the country, Mr. David said.

The researcher said a one-week strict lockdown would change the numbers and would “definitely control the spread of the pandemic.”

“We’re not necessarily advocating a one-week strict lockdown,” Mr. David said. “Based on scientific fact, yes this would definitely have a bigger impact than the current protocols being implemented.”

He called on the public to have a “personal enhanced community quarantine” especially those who can do their work at home.

TALLY
The Department of Health (DoH) reported 4,437 coronavirus infections on Tuesday, bringing the total to 631,320.

The death toll rose by 11 to 12,848, while recoveries increased by 166 to 560,736, it said in a bulletin.

There were 57,736 active cases, 92.6% of which were mild, 4% did not show symptoms, 1.3% were critical, 1.3% were severe and 0.68% were moderate.

The DoH said 10 duplicates had been removed from the tally, while four recovered cases were reclassified as deaths. Seven laboratories failed to submit data on Mar. 15.

About 8.8 million Filipinos have been tested for the coronavirus as of Mar. 14, according to DoH’s tracker website.

The coronavirus has sickened about 120.8 million and killed 2.7 million people worldwide, according to the Worldometers website, citing various sources including data from the World Health Organization.

About 97.4 million people have recovered, it said.

Philippine health authorities on Monday reported 5,404 coronavirus infections, the highest daily tally since August as Manila, the capital and nearby cities started enforcing curfews amid a fresh spike in cases.

It was the highest reported in a day since Aug. 14, when DoH posted 6,216 cases, according to past health bulletins.

The surge in coronavirus cases was nearing peak levels posted in the second half last year, presidential spokesman Herminio L. Roque, Jr. told a televised news briefing.

“We might go past the peak in August if we fail to reduce COVID-19 cases,” he said in Filipino.

President Rodrigo R. Duterte in August 2020 heeded the call of the health sector to put back Metro Manila and nearby provinces under the second strictest form of lockdown as hospitals neared total collapse.

Mr. Roque said there was no compelling reason to place the entire country under an enhanced community quarantine since hospitals still have the capacity to treat coronavirus patients.

While eight of the country’s 17 regions have posted a steady increase in health care use rates since Feb. 11, none has reached the moderate risk level, Mr. Roque said.

An inter-agency task force has asked businesses to improve ventilation and ordered local governments to intensify contact-tracing efforts, he said.

At the same briefing, vaccine czar Carlito G. Galvez, Jr. blamed the fresh spike in coronavirus cases on Filipinos’ violation of minimum health standards.

More people have relaxed their compliance with health protocols due to the arrival of the vaccines, he said.

Mr. Roque said the spike should not be blamed solely on the gradual reopening of the economy. “We can open the economy as long as we follow health standards.” — Vann Marlo M. Villegas and Kyle Aristophere T. Atienza