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Virus outbreak pushes robots to the frontlines of hospitals

THE deadly coronavirus outbreak, which has pushed the Chinese medical community into overdrive, has also prompted the country’s hospitals to more quickly adopt robots as medical assistants.

Telepresence bots that allow remote video communication, patient health monitoring and safe delivery of medical goods are growing in number on hospital floors in urban China. They’re now acting as a safe go-between that helps curb the spread of the coronavirus.

Keenon Robotics Co., a Shanghai-based company, deployed 16 robots of a model nicknamed “little peanut” to a hospital in Hangzhou after a group of Wuhan travelers to Singapore were held in quarantine. Siasun Robot and Automation Co. donated seven medical robots and 14 catering service robots to the Shenyang Red Cross to help hospitals combat the virus on Wednesday, according to a media release on the company’s website. Keenon and Siasun didn’t reply immediately to requests for comment. JD.com Inc. is testing the use of autonomous delivery robots in Wuhan, the company said in a statement. Local media has also reported robots being used in hospitals in the city as well as in Guangzhou, Jiangxi, Chengdu, Beijing, Shanghai, and Tianjin.

The rapid spread of the coronavirus has left provincial hospitals straining to cope and helped accelerate the embrace of robots as one solution, turning the gadgets into medical assistants. These bots join China’s tech-heavy response to the coronavirus outbreak, which also includes airborne drones and work-from-home apps. The jury remains out on how effective these coping tactics will be.

China’s rapid buildout of fifth-generation wireless networking in areas around urban hospitals has also seen a rise in 5G-powered medical robots — equipped with cameras that allow remote video communication and patient monitoring. These are in contrast to robots like little peanut, whose primary function is to make indoor deliveries.

“The technology of robots used in Chinese hospitals isn’t high, but what this virus is also highlighting — and it could be the next stage of Chinese robots — is the use of medical robot deployment,” said Bloomberg Intelligence analyst Nikkie Lu.

China Mobile Ltd. donated one 5G robot each to both Wuhan Union Hospital and Tongji Tianyou Hospital this week, according to a report by ThePaper.cn. Riding the 5G network, these assistant bots carry a disinfectant tank on board and will be used to safely clean hospital areas along a predetermined route, reducing the risk to medical personnel.

Zhejiang People’s Hospital used a 5G robot to diagnose its first coronavirus patient on Sunday, according to a report by the Hangzhou news center run by the State Council Information Office. Beijing Jishuitan Hospital performed remote surgery on a patient in Shandong province via China Telecom Corp.’s 5G network last June.

While it may take patients a moment or two to get over the shock of being helped by a robot rather than a medical professional, bots have already permeated a growing number of sectors in Chinese society including nursing homes, restaurants, warehouses, banks and over 200 kindergartens.

Financial services company Huachuang Securities Co. believes even more robots are in China’s immediate future. Pointing to National Bureau of Statistics data suggesting that domestic production of industrial robots increased by 15.3% in the month of December, they predict similarly fast growth in the current quarter, according to a report published by Finance Sina.

The increased quantity of robots deployed to combat the coronavirus has helped accelerate China’s path to the goal it had already set for itself. The country wants to become one of the world’s top 10 most intensively automated nations by the end of this year. — Bloomberg

Highballs: Matching mixers with whiskey

TIPPLING is even easier with a handful of new drink recipes from Johnnie Walker.

Johnnie Walker gave guests a taste of its Highball collection during the launch of the Johnnie Walker arcade on Feb. 5. While the arcade, featuring wholesome games like air hockey, closed its run in Poblacion’s Kondwi on Feb. 8, the fun continues while the arcade makes its rounds within the metro (the brand’s Facebook page will keep you up to speed).

As for the drinks: Rian Asiddao, Diageo Reserve Brand Ambassador, told us that the ratio for making a whisky highball was 3:1 (mixer to spirit, respectively). With that, Mr. Asiddao mixed the Johnnie and Lime Highball (with the brand’s Black Label and lemon-lime soda), Johnnie and Ginger (Double Black and ginger ale), and Johnnie and Apple (Gold Reserve and apple juice). Mr. Asiddaso said that the pairing were determined by their bases’ flavors: the zestiness of soda pairs with the fruity-smokiness of the Black Label, the intense smokiness of the Double Black goes with the spice and sweetness of ginger ale, and the Gold Reserve pairs with the acidity of the apple juice. “It complements the notes of the whisky,” said Mr. Asiddao.

The recipes are supposed to target those intimidated by the tradition and taste of whisky. “This is a good introduction for them,” he said. “We want to make it vibrant, we want to make it fun, we want to make it accessible to everyone.”

Whisky snobs might frown at the idea (imagine all that blending, just to be splashed down with juice!), but Mr. Asiddao reassures us: “When we talk about taste — food, whisky, gin, whatever — it’s subjective. You can enjoy whatever and however you want. In whisky, there are no rules. You can have it neat, on the rocks, or in a cocktail. So long as you enjoy it; it’s your preference.” — Joseph L. Garcia

New ECB appointee defends easy policy

ISABEL SCHNABLE defended the central bank’s easy policy. — WIKIPEDIA.ORG

FRANKFURT — Germany’s new appointee to the European Central Bank’s (ECB) board, Isabel Schnabel, defended the ECB’s easy-money policy on Tuesday, saying that the euro zone would have been worse off without it and it was up to others to counter the side effects.

Her words marked a departure from German central bankers’ long-held scepticism toward the ECB’s ultra-aggressive stimulus policy of sub-zero rates and massive bond purchases, which has caused two of her predecessors to resign in recent years.

“In the absence of these monetary policy measures, the euro area’s development would have been much weaker,” Ms. Schnabel told an audience in Karlsruhe, Germany. “A fundamental departure from (current ECB) policy does not seem appropriate.”

Ms. Schnabel has pledged to fight anti-ECB sentiment in her home country since she joined its Executive Board on Jan. 1, replacing Sabine Lautenschlaeger, who had resigned after disagreeing with the latest ECB rate cut and bond purchases.

Jens Weidmann, the head of Germany’s Bundesbank, once testified against one ECB bond-buying scheme before Germany’s top court.

Schnabel stigmatized “claims and accusations that have no basis” and sought to pick apart the argument that the central bank is expropriating German savers while fueling bubbles in stocks and property.

One of her arguments was that property prices in Europe’s largest economy were at around the same level that they had been in 1990, once they were adjusted for inflation.

What’s more, she argued, it was “primarily up to other policy makers,” from governments to financial watchdogs, to tackle the side effects of the ECB’s policy on the distribution of wealth and on financial stability.

“Distributional issues lie in the remit of fiscal and social welfare policy,” she said. “And containing risks in the financial system is a task for financial market regulators and supervisors.”

She conceded, however, that rate-setters should also weigh the pros and cons of their actions, and said the ECB would tackle the topic as part of a review of its strategy this year. — Reuters

Tax dispute with Makati City remains pending, says Smart

SMART Communication, Inc. said the decision by the Court of Tax Appeals (CTA) allowing the Makati City government to inspect its documents over its alleged P3.25-billion tax deficiencies from 2012 to 2015 has nothing to do with tax evasion.

“At the outset, we wish to clarify the issue: this case stems from a dispute over the correct assessment of local franchise taxes by the Makati City government. Contrary to some published reports. It does not involve tax evasion,” Smart said in a statement on Wednesday.

Smart said it received an “erroneous” assessment for local franchise taxes (LFT) from Makati City in March 2018, covering the periods of 2012 to 2015. It filed a petition in July 2018 with the Regional Trial Court (RTC) seeking to nullify the assessment. The RTC granted in June last year the local government’s motion for production or inspection of Smart’s documents. Smart appealed the ruling to the CTA and asked for a temporary restraining order and preliminary injunction, which the court denied, upholding the RTC’s decision.

“It is important to note that the CTA has not decided on the LFT liability of Smart to the City of Makati,” Smart said. — Arjay L. Balinbin

Video game makers ride to riches on arc of Keanu Reeves’ career

SONIC the Hedgehog 3 had just been released and Keanu Reeves was about to hit the big screen in Speed when Marcin Iwinski and high school pal Michal Kicinski launched their video-game company.

It was May 1994 and the CD-ROM was still in vogue, so they called their venture CD Projekt and set out to distribute games for the Polish market. They struck deals with developers including Activision and Acclaim Entertainment, translating dialog, instructions and packaging into their native language.

A quarter-century later, at Microsoft Corp.’s 2019 Xbox conference in Los Angeles, Reeves shocked the video-game world, appearing onstage to present a demo of CD Projekt’s Cyberpunk 2077 — a futuristic, role-playing game in which he’ll appear.

Shares of Warsaw-based CD Projekt have surged 43% since the Xbox event in June and more than 1,800% in the past five years, the best performance by far in Poland’s WIG20 Index, putting Iwinski, the 45-year-old co-chief executive officer, on the cusp of becoming a billionaire. He owns 12.6% of the outstanding stock, giving him a net worth of $992 million. Kicinski, who left the company several years ago, has a 10.9% stake worth $847 million.

Both could soon join the rapidly growing ranks of video-game billionaires including Sea Ltd. co-founder Gang Ye, who crossed the threshold in November after the Singapore-based company reported that quarterly revenue tripled, as well as Epic Games Inc. founder Tim Sweeney, who brought “Fortnite” to the masses.

In its infancy, CD Projekt struggled to make money distributing legal copies of games because Poles preferred to buy cheaper pirated versions on the black market. So Iwinski and Kicinski expanded into e-commerce sales and programming and established the CD Projekt RED gaming studio.

In 2007, it introduced Witcher — based on Andrzej Sapkowski’s fantasy novels — and turned it into a series of games that draws from Slavic mythology and features a lone medieval warrior, surrounded by strong female characters, battling supernatural beasts. The most recent version, Witcher 3, sold tens of millions of copies and brought the studio global acclaim. Netflix recently launched The Witcher TV series, and its popularity could further boost game sales.

Since the launch of ‘Witcher 3’ in 2015, the developer hasn’t released any major game that could drive new sales apart from add-ons or spinoffs from the existing franchise. In contrast with the industry’s giants which have diversified portfolios and a steady stream of new releases, CD Projekt is betting big on a single title.

Cyberpunk’s highly anticipated April debut was pushed back to September for its 400 programmers and designers to “test, bug-fix and polish” the company’s next flagship product, according to a Jan. 16 regulatory filing that caused a fleeting drop in CD Projekt’s stock.

Cyberpunk is intended to be one of the most technologically advanced productions for current gaming consoles.

Ken Rumph, an analyst at Jefferies Financial Group Inc., has said the delay probably won’t inflict lasting damage on the company’s fortunes.

“I don’t think it stops Cyberpunk from being the hit of the year,” he told Bloomberg last month. — Bloomberg

Japan’s Suntory to sell super-expensive, 55-year Yamazaki whisky

TOKYO — Japan’s Suntory Holdings on Thursday unveiled a limited edition 55-year-old Yamazaki single malt whisky, which it will sell for ¥3 million ($27,347.31) a bottle, aiming to bolster its credentials as a premium whisky maker.

Only 100 bottles will be sold from June 30, and buyers will be chosen by lottery, the company said.

Suntory and other premium whisky makers have been faced with depleted stocks of aged whiskies after an unexpected surge in popularity of single malts in the past decade. Many have turned to blends without age statements to manage supply.

The company, for example, ended sales of its popular 17-year Hibiki, which appeared in the film Lost in Translation, in 2018. In the past few years, Suntory has issued more no-age blends and has depended on strong sales of much cheaper whisky highballs for growth.

But many whisky aficionados still seek out aged single malts, and Kengo Torii, head of Suntory’s whisky division, said it wanted to shore up its reputation as a premium manufacturer.

“We were concerned that we had not been able to deliver anything new for a long time regarding the Yamazaki brand,” he said.

Blended from whisky matured in mizunara and white oak casks, the edition will be the oldest version of Yamazaki, Suntory’s flagship single malt produced at Japan’s first malt whisky distillery in Osaka.

Suntory chief blender Shinji Fukuyo described the taste as sweet and woody, with a mature, fruity aroma and long aftertaste.

The company in 2005 sold a limited edition of a 50-year-old Yamazaki for ¥1 million. One of them auctioned by Bonhams in Hong Kong in 2018 fetched HK$2.695 million. — Reuters

Malaysia’s central bank sees ‘ample room’ for policy easing

BANK NEGARA Malaysia’s chief said they have policy space to boost growth. — WWW.BNM.GOV.MY

KUALA LUMPUR — Malaysia’s central bank said on Wednesday there was “ample room” to adjust interest rates, after economic growth slowed to the weakest in a decade in the fourth quarter and the COVID-19 outbreak threatened to pile on more pressure this year.

“We have ample room, inflation is still low,” Bank Negara Malaysia (BNM) Governor Nor Shamsiah Mohd Yunus told a news conference when asked about the possibility of a rate cut after the growth figures were released.

The central bank unexpectedly cut its overnight policy rate last month by 25 basis points to 2.75%, the lowest since March 2011.

Southeast Asia’s third-largest economy grew 3.6% in October-December from the same period a year earlier, due to lower output of palm oil, crude oil and natural gas, and a fall in exports amid the US-China trade war.

The pace was the weakest since the global financial crisis, well below the 4.2% rise forecast by analysts in a Reuters poll, and slower than 4.4% in the third quarter.

Full-year growth came in at 4.3%, below the government’s forecast of 4.7% and the weakest since 2016.

The coronavirus epidemic in China will put further pressure on the economy this year, particularly in the first quarter, the central bank said after releasing the data.

The Malaysian government, which has forecast the economy to grow at 4.8% this year, is already working on a stimulus package for aviation, retailing and tourism to help cushion the impact.

“The economy is still being supported by very firm private sector spending, and that is a positive development in our economy. More importantly, private investment might turn around,” Nor Shamsiah said.

“But there are downside risks. It’s very difficult to predict how long it will take before (the virus) is contained… there are so many moving parts, but we do acknowledge it will impact us in the first quarter.”

Malaysia’s economy, like many in Asia, came under heavy pressure last year from the escalating Sino-US trade war and softening global demand, with the mining sector particularly hard hit.

While China and the US agreed a preliminary deal last month, the fast-spreading epidemic has raised fresh global growth risks and heightened expectations of more stimulus in more vulnerable economies.

Capital Economics expects things to only get worse in the first quarter as tourist arrivals plummet due to virus fears. Tourism accounts for 11.8% of Malaysia’s gross domestic product (GDP), according to BNM.

Potential disruptions to Malaysia’s manufacturing sector due to factory shutdowns in China and falling oil prices could also drag on growth.

“While there is clearly a great deal of uncertainty, we are penciling in a slowdown in GDP growth to just 1.5% y/y in Q1 — a much bigger hit to the economy than during SARS,” Alex Holmes, an Asia economist with Capital Economics, said in a note to clients.

However, analysts say growth could snap back quickly if the virus is contained soon, much as it did after SARS. — Reuters

PXP Energy issues drilling update on exploration well in Peru

PXP Energy Corp. told the stock exchange on Wednesday that the exploration well in offshore Peru, in which it has a stake, has drilled down to a depth of 1,654-meter measured depth (MD).

It was quoting a press release made in Australia by Karoon Energy Ltd. about the drilling of Marina-1 exploration well in Block Z-38 Tumbes Basin.

Pitkin Petroleum Ltd., a 53.43%-owned unit of PXP Energy, holds a 25% participating interest in Peru Block z-38.

Karoon said the shallower sections of La Cruz and Mal Pelo formations were encountered down to 1,654 meters MD “and preliminary logging results indicate that the well encountered water bearing sands and some gas shows in thin beds which are not considered to be commercial.”

“The information obtained from the shallow sections provides insights into similar in the deeper waters. La Cruz and Mel Pelo results are independent of the deeper primary targets,” it said. “Operationally the well is progressing to plan. It is on time and on budget, with no safety or environmental incidents.”

Karoon’s wholly owned subsidiary, KEI (Peru Z-38) Sucursal del Peru, owns a 40% operating equity interest in the Block Z-38, with Tullow Oil plc holding 35% and Pitkin Petroleum holding the remaining equity interest.

SoftBank’s Arm to launch new AI chip for small devices

ARM Ltd., (Arm) a semiconductor technology firm owned by SoftBank Group, unveiled a chip technology aimed at putting artificial intelligence (AI) functions on tiny devices such as sensors designed to detect patterns in human speech or other streams of data.

Arm, which provides chip technology to mobile phone semiconductor suppliers like Qualcomm and end device makers like Apple, has been diversifying its customer base in recent years to markets such as self-driving cars.

It has also expanded to target areas like the “internet of things” — in which many everyday devices such as traffic lights or agricultural irrigation systems will be fitted with internet-connected sensors and automated.

Arm on Monday released the new Cortex M55 processor paired with what it calls its Ethos-U55 “neural processing unit.”

Chips with the technology will hit the market in 2021 and aim to carry out the special kinds of math needed by artificial intelligence (AI) software that can detect vibrations or pick out spoken keywords from a user.

The chips are designed to function with very low amounts of electricity. That allows devices such as sensors to last for years at a time on a small battery and to only connect to the internet when needed.

Minimizing internet connections can help protect privacy by processing data locally and sending only what is needed to remote servers while discarding the rest, Arm executives said.

Many fields such as health care will require data to be processed locally, with little or none of the results sent back to remote servers, Dipti Vachani, senior vice-president and general manager of Arm’s automotive and internet of things line of business, told Reuters.

“You may not want that data to move around,” Vachani said.

The new technology “is going to give you low-power processing, to process data where it is best suited, where you want to keep that data.” — Reuters

Chronicling Nebbiolo Prima 2020

Second of two parts

ALBA, Italy — I came back here to Alba to attend my 4th Nebbiolo Prima in the last six years. Organized by the Union of Alba Wine Producers or Albeisa, Nebbiolo Prima is an annual event purely created for wine journalists and influencers to preview newly released vintages of wines from the DOCG regions of Barolo, Barbaresco, and Roero — all made from Piedmont’s proudest indigenous Nebbiolo grapes. For those who are curious about what participants do during these four days, I chronicled my activities.

DAY 3
9 — 10 a.m.: Talk on Climate Change and Media Influence

Our speaker was Mauro Buonocore, head of the Communication and Media Office at CMCC Foundation (Euro-Mediterranean Center on Climate Change). He discussed the correct dissemination of the scientific research outcomes on climate change, and touched on sensitive issues regarding the reporting of media and the public opinion. He cited some fake news and spurious pictures including those from the Australian bush fires. While the topic was timely, it was sadly totally irrelevant to the wine journalists. For this, the organizers of Nebbiolo Prima, Albeisa, issued an apology for adding this talk to the list of Nebbiolo Prima activities for participants

10 a.m. — 2 p.m.: Blind Tasting. Seventy-nine wines total: All from Barolo 2016

This was one day I took slightly more time, as we went through all Barolos, but these were from the communes of La Morra, Cherasco, Novello and Verduno. I had a few re-tastings only because some of the wines I tasted were incredibly good, and I want to make sure I was right in my first whiff and quaff. I finished these 79 wines in two hours and four minutes, averaging 94 seconds per wine.

3 — 5:30 p.m.: Trip to Cherasco

We were taken on a short 30-minute ride to this historic town. Cherasco is a small municipality in the Province of Cuneo. The municipality is only 81 square kilometers in area and has a population of just over 9,000 people. This small town has had many historic moments, including in 1796 when then French general Napoleon Bonaparte stayed there to sign the armistice between Napoleonic and Piedmontese troops. This town has much baroque architecture still intact and is a hub for art and culture. We had great stroll despite near freezing 3-5°C temperature. We visited the Palazzo Salmatoris, the Arco del Belvedere, the Museo Adriani, and a few old churches and cathedrals. All of these landmarks are just within half kilometer of each other. I even got to buy some chocolates to bring back as gifts, from a local chocolatier store named Barbero.

7:30 — 10:30 p.m.: Dinner and Meet & Greet with Wine Producers at Campamac Osteria

Campamac Osteria is the most beautiful (aesthetically speaking) restaurant I have seen in my past five visits to the Langhe. As you enter the restaurant you will see two open kitchens with chefs in action, making fresh pastries or cooking the main courses. You will also pass through multiple large chillers showcasing choice slabs of meat, and a huge cheese trolley before you are led to your tables. There are also three wine cellars in the Campamac which sadly I was not able to check out because of the very busy dinner crowd. Once more, the food was excellent from appetizer to dessert, with the main course — Cubo di Passona in Crosta di Pane e Nocciole (hazelnut-crusted cube of Fassona beef) — being simply surreal. We had some great single vineyard Barolos and Barbarescos opened for to us by very affable and engaging wine producers.

DAY 4
No seminar or activity in both morning and afternoon. A more relaxing day for all the journalists in attendance.

10 a.m. — 2 p.m.: Blind Tasting. Seventy-three wines total: All again from Barolo 2016

This time, the Barolos came from the communes of Barolo (of same commune name), Castiglione Falletto, and Monforte d’Alba Cherasco, Novello, and Verduno. I was already at peak form that morning and I finished these 73 wines in one hour and 40 minutes, averaging 82 seconds per glass.

I just want to mention there is no right formula for tasting, and neither fast nor prolonged assessment can be considered better. Nebbiolo wines are even trickier, as Nebbiolos are quite rustic when young, and thus the DOCG requires aging periods for these wines prior to release. I just stick with what works for me. At the end of the day, that is why there were several wine critics and tasters invited, each and every rating can vary, but the real good wines will always come out shining regardless of who tastes them.

I skipped the dinner as I was quite “wined out” already and wanted some private time to walk around the beautiful city of Alba. I was also in search of food and souvenir items to bring back home to Manila. Overall, I did tastings for 350 wines (303 blind and 47 old vintages) and enjoyed countless glasses of wine at every lunch and dinner. I cannot think of a better way of combating the cold weather.

Thank you to Beatrice Vianello and Anna Beatrice of SOPEXA, and to Albeisa for the kindest invite.

The author is a member of the UK-based Circle of Wine Writers (CWW). For comments, inquiries, wine event coverage, wine consultancy and other wine related concerns, e-mail me at protegeinc@yahoo.com.

Libor transition hits hurdle as sales of bonds linked to SOFR slump

THE BIGGEST ISSUERS of bonds tied to the benchmark tapped to replace US dollar Libor are suddenly pulling back. That’s a potential blow to efforts by regulators to wean America’s financial system off a much-maligned reference rate.

The Federal Home Loan Banks, which have priced about $170 billion of debt tied to the Secured Overnight Financing Rate (SOFR) since its inception in 2018, have virtually turned off the spigot in recent months. They’ve sold roughly $13 billion of SOFR-linked notes since the start of November, down from more than $70 billion over the preceding three months, according to data compiled by Bloomberg.

Market watchers say the change of tack is unlikely an indictment of SOFR itself. Rather it may simply be the lenders capitalizing on shifts in investor demand. But they also note the vital role these banks — which support housing, economic development and infrastructure projects — have played as standard-bearers in the nascent SOFR market. And there is a risk to wider adoption among issuers should they keep retrenching.

“The home loan banks will remain a key part of the Libor transition,” said Mark Cabana, head of US interest-rate strategy at Bank of America Corp. “They’re the biggest part of the transition to date and if they don’t continue to keep the market focused on this and get investors comfortable with transitioning to SOFR, then 2020 is going to be a critical year.”

Federal Home Loan Bank issuance of SOFR-linked debt has declined since August

Critical, Mr. Cabana says, because time is running short to convince issuers to embrace SOFR before the London interbank offered rate is set to be phased out at the end of 2021. The replacement benchmark has already run into a series of snags since its debut, and anything that further dents market confidence in its viability risks muddling the transition, or even potentially delaying it.

REPO BLOWBACK
Those backing SOFR have also underscored the importance of growing the market for cash securities to spur hedging and foster the creation of forward-looking term rates, a development crucial to the benchmark’s long-term success.

The Federal Home Loan Banks “will continue to practice appropriate risk management while assessing the relative value in both the SOFR cash and derivative markets” during the Libor transition “to meet member and market needs,” Randy Snook, chief executive officer of the FHLB Office of Finance, said in an e-mailed statement.

On the flip side, sales of Libor-linked debt by the FHLBs has surged in recent months.

Some say that what’s likely fueling the shift is a recent slump in demand for SOFR-linked products from money-market funds, once one of the largest buyers. Since the third quarter, the Federal Reserve has been injecting liquidity into short-term markets via overnight and term repurchase agreement operations. While the intervention has succeeded in keeping funding rates steady after last year’s blowout, it has also capped yields on products tied to repo rates, like SOFR. The rate set at 1.58% as of Feb. 10, which was unchanged from the prior session, New York Fed data show.

“People have shied away from both fed funds floaters and SOFR-based floaters just because of what’s happening with the Fed in the repo market,” said Deborah Cunningham, chief investment officer of global money markets at Federated Investors in Pittsburgh. They “looked great with a nice wide spread and high levels until the Fed started doing all of their intervening.”

Ms. Cunningham said floating-rate debt — including notes tied to Libor, fed funds, Treasury bills and SOFR — account for about 25% of assets in prime money-market funds, and around 30% to 35% of assets in government-only funds.

Given the reduced demand from money funds, the drop-off is simply a reflection of a “normally functioning market” rather than the product of structural concerns over the new benchmark, according to David Wagner, a senior adviser at Houlihan Lokey, Inc. who is leading the firm’s Libor Transition Advisory Services practice.

The FHLBs “know they can sell a SOFR floater, but if it’s more expensive to do it they’re going to cut down on issuance,” Wagner said. “This is good. With the Libor transition we’re used to policy-based decisions, but this is a market participant making an economic-based one.”

Declining FHLB issuance may also be due to concerns over exposure to SOFR-related products. Bank of America estimates the difference between the FHLBs’ SOFR-linked assets and liabilities — also known as basis risk — is at least $35 billion.

SOFR TREASURIES?
Ultimately, the shift may be short-lived. The Federal Housing Finance Agency, which regulates the FHLBs, in September announced that all member banks by the end of the first quarter should stop selling Libor-linked debt maturing after December 2021. In addition, the agency is set to require mortgage giants Fannie Mae and Freddie Mac to stop purchasing Libor-based adjustable-rate mortgages by the end of this year.

Federal Reserve Chairman Jerome Powell spoke about the benchmark transition in his testimony to Congress Tuesday, saying that officials are committed to having banks switch away from Libor by the end of next year.

“Libor itself is really a problem in the sense that there’s no guarantee” the rate will be around after the end of 2021, he said.

One complaint about SOFR is that unlike Libor, it can’t serve as a barometer of stress in credit markets. The central bank is working with regional and larger banks “about the idea of having a credit-sensitive rate,” Mr. Powell added. Some of Mr. Powell’s colleagues recently wrote a letter to the Alternative Reference Rates Committee discussing this issue.

Wall Street strategists still see scope for the Treasury to potentially issue SOFR-linked notes in the near future, a move that would likely serve as a major catalyst for corporate participation in the market.

Both JPMorgan Chase & Co. and Barclays Plc expect the US government to sell securities tied to the reference rate beginning in the second half of 2020 or 2021. At last week’s refunding announcement, the Treasury signaled plans to issue a request for information on the matter.

Yet for now, issuance of SOFR-linked debt remains tepid. — Bloomberg

Vivant Energy forges power deal with Bantayan electricity seller

VIVANT Energy Corp. said its unit had signed a 15-megawatt (MW) power supply agreement with the Bantayan Electric Cooperative (Banelco) for Bantayan Island, a popular tourist destination in northern Cebu.

It said under the agreement, Isla Norte Energy Corp. — a consortium of Vivant Energy, Vivant Integrated Diesel Corp. and Gigawatt Power, Inc. (GPI) — will install a 23.31-MW diesel-fired power plant in the town of Bantayan.

“Having a stable and reliable supply of energy is vital to the economic and social development of the community and we’re honored to be the one given this responsibility. We want to do good here because this is in our home, Cebu,” said Vivant Energy Chief Operating Officer Emil Andre M. Garcia in a statement.

Vivant Integrated Diesel is a unit of Vivant Energy, which manages the energy investments of Vivant Corp.

Vivant Energy quoted Banelco President Oscar T. Seares as saying: “We look forward to a happy partnership with Isla Norte in the next 15 years.”

GPI President Walden H. Tantuico said: “The service, commitment and reliability that our power plants provide in the distribution systems of electric cooperatives are more than satisfactory.”