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Gov’t to raise P30-B via 5-yr retail bond issue

The government is set to raise at least P30 billion via the issue of five-year retail Treasury bonds (RTBs) beginning next week to boost its resources by tapping a broader segment of buyers.

In a notice of offering published Friday, the Bureau of the Treasury (BTr) said the five-year RTBs will be auctioned over three weeks starting July 16 until Aug. 7.

The upcoming offer will be the second of the year and 24th overall for the Treasury. In February, the government raised a record P310.8 billion from RTBs – including P250 billion in “new money” and P60.8 billion from the exchange offer program.

The BTr said it has the option to increase the volume awarded and may close the offer period earlier if necessary.

Aside from the usual selling agents such as banks, the BTr said small investors can access the bonds via the Online Ordering facility on its website and through the new BONDS.PH mobile application offered by the Union Bank of the Philippines.

It said the bonds can also be bought via the electronic payments (e-payments) facilities of China Banking Copr., Development Bank of the Philippines (DBP), First Metro Securities and Brokerage Corp. and Land Bank of the Philippines (LANDBANK).

Selling agents can place bids of at least P500 milion. The RTBs will be issued in scripless form and will be sold in minimum denominations of P5,000.

Bonds purchased online will require a minimum P5,000 investment, capped at P500,000 per transaction.

Interest rates will be based on curent market levels of comparable securities. Interest payments will be made quarterly in arrears.

The bonds will be issued on Aug. 12 and mature on Aug. 12, 2025.

The RTBs will be listen on the Philippine Dealing and Exchange Corp. (PDEx).

RTB target small investors and are positioned as low-risk instruments with relatively high yields.

The BTr said the 24th issue is eligible for exchange by holders of series RTB 10-01, FXTN 05-73, RTB 10-02 or FXTN 07-57, who can turn in these papers for the new RTB.

It also opened up the exchange offer program for the RTB issue in February to holders of RTB 3-08, issued in 2017. — Beatrice M. Laforga

DBP to adjust lending portfolio to ‘maximize’ benefit to slowing economy

THE Development Bank of the Philippines (DBP) said it is adjusting its lending portfolio to favor priority sectors with the most potential development impact as the economy braces for a severe economic downturn, its CEO said Friday.

DBP President and CEO Emmanuel G. Herbosa said the review will allow the bank to “concentrate on initiatives” supporting key sectors while “ensuring profitability and sustainability” for the bank as the economy slows.

“We are rationalizing our lending programs to maximize available resources to our priority sectors as we assist them in coping with the challenges of a vastly-changing socio-economic landscape,” Mr. Herbosa was quoted as saying in a statement.

He said “updating the features” of some the bank’s programs will be in line with the changing needs of the market and as the bank prepares for a bigger role that it will play in implementing the stimulus bills that are pending in Congress.

Currently, a majority of the bank’s loans are devoted to infrastructure and logistics; micro, small and medium enterprises; the environment; social services and community development.

Mr. Herbosa did not cite details of the portfolio adjustments. The DBP had yet to reply at deadline time.

Under the proposed Bayanihan II law, the DBP and the Land Bank of the Philippines (LANDBANK) will introduce low-interest loan programs to affected non-essential businesses.

Also, around P15 billion will be earmarked to supplement the DBP’s capital while LANDBANK will be getting P30 billion, with both acting as the wholesale banks.

“It is imperative for all financial institutions, such as the DBP, to productively use their available resources to benefit more stakeholders as we gradually emerge from this pandemic,” Mr. Herbosa said.

He added that the DBP and institutional partners will ensure that the resources are “maximized” with no program “redundancies.”

The bank’s net profit fell 7% to P1.46 billion in the first quarter after it increased loan loss provisions due to the pandemic. — Beatrice M. Laforga

NPL ratio could double to 4-5% due to faltering economy – S&P

The banking industry’s non-performing loan ratio (NPL) could hit 4-5% due to the pandemic, which has weakened businesses and thrown many out of work.

“In our base case, we assume the NPL ratio for the Philippine banking system could double to 4%-5% from current levels,” Nikita Anand, analyst at S&P Global Ratings said in an e-mail.

Ms. Anand said both businesses and households will be hurt by the crisis, which in turn will raise bad-loan levels.

“We expect businesses and consumers to feel the pain from a weak economy, higher unemployment, and lower remittances from overseas Philippine workers,” she said.

FTamma Febrian, associate director of the Financial Institutions Group at Fitch Ratings, said segments such as the micro-, small, and medium-sized enterprises and consumer lending are “at most risk of deterioration.”

“We’re also closely monitoring the real estate sector, which will also be affected by weakened consumer spending and higher unemployment and is sensitive to dynamics in the POGO (Philippine Offshore Gaming Operators) sector,” he added.

According to the Bangko Sentral ng Pilipinas (BSP), te industry’s NPLs in May rose to 2.43% from 2.31% in April.

“The slight uptick in NPLs may be traced to borrowers from the real estate industry and individual borrowers who availed of motor vehicle loans,” BSP Managing Director for Policy and Specialized Supervision Lyn I. Javier said in an e-mail.

“This may be expected as there were minimal real estate business activities during the enhanced community quarantine and households’ paying capacity was impaired by the work and travel restrictions,” she added.

The bad loan ratio peaked at 17.6% in 2002 in the aftermath of the Asian Financial Crisis.

“We recognize that the COVID-19 pandemic may exert pressure on the current quality of bank loan portfolios, but we expect the impact to be manageable due to the banking system’s preparedness,” Ms. Javier said.

As of the end of 2019, the industry’s capital adequacy ratio was 15.4% on a stand-alone basis and 16% on a consolidated basis, which are both beyond the 10% minimum requirement by the BSP.

“Compared to regional peers, Philippine banks entered the pandemic with relatively strong asset quality and good loan-loss coverage, which has provided the banks adequate buffers to absorb further loan deterioration.” Joyce Ong, an analyst at Moody’s Investors Service, said.

Banks have also increased loan provisioning in the first quarter to factor in the potential fallout from the pandemic.

In May, bank allowances for credit losses rose 26.7% year on year to P253.4 billion

“In our opinion, Philippine banks’ good capital position and provisioning for NPLs put them on a relatively strong footing to manage rising risks from the economic slowdown driven by COVID-19,” Ms. Anand said. — Luz Wendy T. Noble

Gov’t increases stake in UCPB to 97%

The government increased its stake in the United Coconut Planters Bank (UCPB) to 97% from 75% previously, the Department of Finance (DoF) said, while placing a P30 billion deposit to support the bank.

In a statement Friday, Finance Secretary Carlos G. Dominguez III said the government converted into special preferred shares P12 billion worth of notes that UCPB had issued to the Philippine Deposit Insurance Corp. (PDIC).

UCPB issued the notes to PDIC in 2009 as part of the bank’s recapitalization program.

The notes are convertible to special preferred shares and the PDIC exercised this option, “effectively increasing the government’s shareholdings in UCPB to 97%,” PDIC President Roberto B. Tan was quoted as saying.

Mr. Tan added that the Bureau of the Treasury (BTr) also made a P30 billion deposit to UCPB to support the bank.

Mr. Dominguez, who chairs the PDIC board, said the move “reaffirms the government’s commitment to support the bank.”

In a Viber message, he told reporters Friday that the administration has been following the concept of “strengthening the capital bases and rationalizing the structures” of government-owned financial institutions including UCPB, Land Bank of the Philippines (LANDBANK), the Development Bank of the Philippines and the Overseas Filipino Bank (OFBank).

“[The policy has] the objective of improving their level of service and value for their stakeholders, the Filipino people. This latest move of PDIC of converting the capital note it held to more permanent special preferred shares in UCPB is totally in line with the above objective,” he said.

“We expect the Board of UCPB to consider re-orienting their focus on serving the farmers and processors of coconut andother vegetable oil products, but balancing their portfolio with exposure to other industries and clients in the middle market,” Mr. Dominguez added. — Beatrice M. Laforga

SEC approves Ayala Land’s REIT offering

The real estate arm of Ayala Corp. has secured the nod of the Securities and Exchange Commission (SEC) for its real estate investment trust (REIT) offering.

In a statement on Friday, the corporate regulator said the commission’s en banc considered “favorably” the registration statement of Ayala Land, Inc. for its proposed REIT initial public offering of 1.092 billion common shares on the main board of the Philippine Stock Exchange (PSE).

Ayala Land’s AREIT, Inc., formerly known as One Dela Rosa Property Development, Inc., will offer as much as 47.86 million new common shares and up to 409.019 million existing common shares, with an over-allotment option of up to 45,688,700 secondary shares, at a maximum price of P30.05 each.

AREIT is seen to fetch at least P1.33 billion in proceeds from the primary offer which it can use to acquire the building of Teleperformance in Cebu to expand its portfolio.

Currently, AREIT owns three commercial buildings: Solaris One, Ayala North Exchange, and  McKinley Exchange. Its portfolio excludes the land on which the buildings stand.

Meanwhile, Ayala Land can raise as much as P13.31 billion if the greenshoe option was fully exercised, allowing the public to own almost half of AREIT’s issued and outstanding common shares.

The SEC said Ayala Land will retain its 41.16% stake in the company, while AyalaLand Offices, Inc., its other unit, will hold the remaining 9.39% interest by the end of the offering.

AREIT plans to sell the shares from July 27 to 31 and list them on the stock exchange on Aug. 7.

BPI Capital Corp. will serve as the global coordinator for the share sale. It will also be the sale’s bookrunner, together with UBS AG Singapore, and lead underwriter, along with PNB Capital and Investment Corp. and SB Capital Investment Corp.

AREIT filed with the SEC its registration statement in February, a month after the agency issued the revised implementing rules and regulations of Republic Act No. 9856, or the REIT Act.

The Ayala unit has yet to receive the SEC’s order of registration and permit upon determination of its compliance with regulatory requirements.

AREIT Fund Managers, Inc., previously known as AyalaLand Commercial REIT, Inc., will manage the company’s assets, focusing on generating rental income and increasing its assets over time, while AREIT Property Managers, Inc., formerly Next Urban Alliance Development Corp., will supervise its leases, sell properties, and run the maintenance and repair of the structure and utilities of the properties, among others.

The REIT law states that an offering company should reinvest the net proceeds from its shares sale in real estate and/or infrastructure projects in the Philippines within a year.

Shares in Ayala Land on Friday dropped by 2.88% to close at P32 apiece. — Adam J. Ang

DoubleDragon targets P17-B proceeds from planned REIT

DoubleDragon Properties Corp. is expecting to raise P16.97 billion from the first series of its real estate investment trust (REIT) offering, the application of which will be filed next month.

In a stock exchange disclosure on Friday, the listed property developer said it had chosen P50.89-billion worth of leasable assets of its joint venture firm DD Meridian Park Development Corp. (DDMP) to make up the first tranche of its upcoming offer.

The seven properties under this series have a combined area of 248,349 square meters (sq.m.) or over a fourth of DoubleDragon’s total leasing assets with 803,000 sq.m.

The company owned by businessman Edgar “Injap” J. Sia II said it will use the P16.97 billion proceeds from the REIT offering to build a 450,000 sq. m. leasable building to add to its portfolio.

DoubleDragon is set to file its REIT listing application with the Securities and Exchange Commission and the Philippine Stock Exchange in August. It targets to list its offer in October.

The DDMP complex is jointly owned by DoubleDragon and the Yujuico family. It sits on a 5-hectare commercial property at the corner of Macapagal Avenue and the Epifanio Delos Santos Avenue (EDSA) Extension at Bay Area, Pasay City in Metro Manila.

The company plans to list 200,000 to 250,000 sq. m. of properties via REIT each year by 2025.

It noted that its total equity stood at P44.5 billion in the first quarter. With the REIT listing, DoubleDragon expects that it will be raised to P50 billion.

“REITs are a good way to recycle capital for expansion of the Company’s portfolio and raise equity to further boost its balance sheet. Since the offer will only cover 33.33% of the REIT basket, DoubleDragon will retain majority of the REIT assets so it will remain consolidated in the Company’s balance sheet,” DoubleDragon Chief Investment Officer Hannah Yulo-Luccini said.

She claimed that the company’s offer has an “attractive” size that would entice both foreign and local investors.

The Sia-led firm said two under-construction buildings within the DDMP complex are slated to be offered over the next two to three years.

It eyes to complete a leasable portfolio of 1.2 million sq. m. over the next two years.

Shares in DoubleDragon inched up 0.59% to close at P17.10 each on Friday. — Adam J. Ang

Globe identifies 27 areas for new cell sites

Globe Telecom, Inc. plans to add more cell sites in Metro Manila and 26 other provinces beginning this month as it targets to further expand its network capability before the end of the third quarter.

“Globe is set to expand further its network capability with simultaneous undertaking of cell-site builds in different parts of the country including  Aklan, Albay, Batangas, Bohol, Bulacan, Cebu, Davao del Sur, Iloilo, Laguna, Metro Manila, Maguindanao, Negros Occidental, Pampanga, Pangasinan, Quezon, Zamboanga, Sulu, Capiz, Nueva Ecija, Nueva Vizcaya, Tarlac, Palawan, North Cotabato, Leyte, Bukidnon, Benguet, Zambales and more starting this month until the end of the third quarter of 2020,” Globe said in a statement e-mailed to reporters on Thursday.

Globe President and Chief Executive Officer Ernest L. Cu has appealed to local government units to relax their permitting requirements so that telecommunications companies can fast-track the execution of their cellular tower projects.

“We are investing billions of pesos to connect the rest of the public to the digital world to enable things like working and learning from home and yet, there are so many obstacles along the way. I think it is really incumbent upon our local officials to provide telecom infrastructure to their constituents. Telco is like water or power. It is something that people need and want,” he said in a statement last week.

The company has committed to spend P63 billion in capital expenditures this year.

Globe reported in May that it was able to spend P10.7 billion in the first quarter, “22% higher than last year and representing 29% of gross service revenues.”

Bulk of the capex spending went to data-related requirements.

Globe also advised its customers in the areas in which the projects will be implemented that they may experience temporary service disruptions such as loss of signal or internet connectivity for at least an hour anytime during the day. — Arjay L. Balinbin

PLDT Enterprise backs up struggling small businesses

PLDT Enterprise is offering a business “solutions bundle” that is specifically designed to help struggling micro, small and medium enterprises (MSMEs) restart their operations during the pandemic.

The package, which is offered free of charge in the first three months of use,  provides business and connectivity solutions and enables MSMEs to digitize their operations.

“With businesses having varied needs beyond data access, the offer comes with an array of add-on solution options to choose from ranging from software, hardware and services” PLDT Enterprise said in a statement e-mailed to reporters on Thursday.

It said PayMaya, Cyber Security, and digital collaboration tools are some of the tools offered under the package to help MSMEs build online presence, accept online payments, improve productivity and collaboration, and enhance operations.

“The overall cost of the bundle will differ, depending on the add-ons selected by customers,” it added.

The company said the Trade department had signified its support for the said initiative.

“Our MSMEs make up the largest portion of business today. With the effects of the pandemic slowing down business activity, members of the private and public sectors must come together to look for novel ways to stimulate business activity,” Trade Secretary Ramon M. Lopez was quoted as saying in the statement.

Juan Victor I. Hernandez, ePLDT president and chief executive officer, said: “With our current situation posing many financial pressure on MSMEs, we have endeavored to design a customizable solution that goes beyond basic connectivity to enable them to kickstart their operations while striving for financial recovery.”

Mr. Hernandez also serves as senior vice-president and head for PLDT and Smart Enterprise Business Groups.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — Arjay L. Balinbin

Stocks end in positive territory due to late bargain hunting

THE LOCAL equities market closed the week in positive territory due to last minute bargain hunting after starting weak on Friday as coronavirus disease 2019 (COVID-19) cases in the Philippines and the rest of the world continue to rise.

The benchmark Philippine Stock Exchange index (PSEi) rose 4.8 points or 0.07% to close at 6,197.38 while the broader all-shares index increased 7.08 points or 0.19% to end at 3,652.6.

“The market ended sideways today, gaining just 4 points from yesterday’s (Thursday’s)close to end the week. The market was weaker in the early part of the session as sentiment was dampened by the apparent resurgence of coronavirus disease 2019 (COVID-19) cases in the United States,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.

As of June 10, the total number of COVID-19 cases globally is at almost 12.27 million, with the United States having the highest confirmed cases at 3.12 million, according to the Johns Hopkins University Center for Systems Science and Engineering COVID-19 dashboard.

Back home, the Department of Health (DoH) on Thursday reported 1,395 new cases that brought the total number of COVID-19 cases in the country to 51,754.

Meanwhile, Philstocks Financial, Inc. Research Associate Claire T. Alviar said the market ended higher due to last minute bargain hunting led by the rally of SM Prime Holdings, Inc. (SMPH), San Miguel Corp. (SMC), and First Gen Corp. (FGEN)

On Friday, SMPH stocks rose P1.40 or 4.59% to end at P31.90 per share, while SMC shares went up 4% or P4.00 to close at P104 apiece, and FGEN shares improved P0.95 or 3.96% to end at P24.95 per piece.

“Aside from rising COVID-19 cases globally and locally, investors braced themselves for the second quarter economic data that are coming out which already anticipated to be dismal,” Ms. Alviar said in a text message.

For Timson Securities, Inc. Head of Online Trading and Trader Darren Blaine T. Pangan, the market’s slight increase may be due to investors reacting to the announcement of President Rodrigo R. Duterte that the country’s economy will be gradually opened.

“On one end market participants are bullish, but on the other side, there are bearish investors who fear that the country may revert back to stricter quarantine measures if the rise on COVID-19 cases continue,” Mr. Pangan said in a text message.

More than half of the sectoral indices declined on Friday’s close.

Mining and oil fell 147.02 points or 2.68% to 5,334.06; financials retreated 4.57 points or 0.37% to 1,221.74; services shrank 4.21 points or 0.29% to 1,435.47; and holding firms went down 9.13 points or 0.14% to 6,529.26.

On the other hand, property rose 27.24 points or 0.92% to 2,981.19 and industrials climbed 16.88 points or 0.22% to 7,661.54.

Decliners outpaced advancers 115 to 82 while 47 names ended unchanged.

Value turnover stood at P5.17 billion with 2.26 billion issues switching hands, higher than P5.09 billion with 1.42 billion issues on Thursday.

Net foreign selling was also higher at P1.41 billion, compared to P649.66 million the previous day.

Mr. Lisbona said that after being tested several times, the market is seen to remain at the 6,130 support level.

“Absent any shocks, we are looking at the market to trade between 6,130 and 6,400 in the coming sessions,” Mr. Lisbona said.

“We’ll have to see next week if the base formed above the 6,000 area holds,” Timson’s Mr. Pangan said. — Revin Mikhael D. Ochave

Peso weakens on collapse in May trade

The peso weakened against the dollar following the release of dismal trade data in May, reflectng the shutdown of economic activity during the lockdown.

The peso closed at P49.485 to the dollar, against its P49.41 finish Thursday, according to data from the Bankers Association of the Philippines.

Week-on-week, the peso appreciated from its P49.55 close on July 3.

The peso opened at P49.50, hitting a low of P49.52 and a high of P49.45.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said currency weakened Friday following the release of trade data for May.

“The peso closed weaker today versus the dollar after the trade deficit/net imports data (were released),” he said in a text message.

In May, merchandise exports fell 35.6% year-on-year to $3.99 billion, according to preliminary data from the Philippine Statistics Authority. Meanwhile, merchandise imports declined 40.6% to $5.85 billion.

The trade deficit narrowed 48.9% to $1.865 billion.

A trader said the peso also weakened ahead of expected US data.

“The peso weakened ahead of a likely recovery in US producer price inflation reports to be released Friday night,” he said in an e-mail.

The US will report the June producer price index for final demand on July 11.

In May, the index rebounded 0.4% after slipping 1.3% in April, which was its biggest decrease since the series was revamped in December 2009, according to Reuters. — Luz Wendy T. Noble

Reactions to Congress’s rejection of ABS-CBN’s franchise renewal

The House of Representatives denied ABS-CBN’s franchise application, voting 70 to 11. Several senators and organizations took to Twitter to react:

• Senator Risa Hontiveros condemned the “politicking” that took place with the issue, claiming that the rejection of the renewal creates a chilling effect on Filipino media.

• Senator Sonny Angara lauded the 11 congress members that voted “no” to the denial for a franchise renewal.

• Kabataan Representative Sarah Elago said that one does not have to be a Kapamilya member to fight for justice and democracy.

• Carlos Conde, Researcher at Human Rights Watch covering the Philippines, provided context, reminding the public that President Rodrigo R. Duterte’s contempt for the TV network was well-known.

• Human Rights Watch Philippines called the move a “grievous assault on press freedom.”

• The National Union of Journalists in the Philippines said that the House of Representatives of the 18th Congress of the Philippines “declared itself enemy of democracy.”

• Statement of ABS-CBN President and CEO Carlo Katigbak:

We are deeply hurt that the Committee on Legislative Franchises has denied the franchise application of ABS-CBN. We believe that we have been rendering service that is meaningful and valuable to the Filipino public. Nevertheless, we would like to thank the Committee for allowing us a chance to air our side on all the issues raised against us.

ABS-CBN would like to thank all the congressmen who stood by their bills to renew our franchise, or who spoke out on our behalf during the hearings. We are forever grateful.

We also thank everyone who expressed their support and offered their prayers for us. We could not have gotten to this point without you.

We remain committed to public service, and we hope to find other ways to achieve our mission. Together with our employees and our audiences all over the world, we share in your sadness over this setback. We look forward to the day when we can again reunite under our broadcast. Mga Kapamilya, thank you for keeping the faith with us.

Kapit lang, muling magliliwanag ang kwento ng bawat Pilipino.

Not all reactions were on the side of ABS-CBN.

• Jay Sonza, former broadcaster, congratulated the House of Representatives.

• Mabuhay ang House of Representatives, Committee on Legislative Franchises, Committee on Good Government and Public Accountability and the men and women of Congress.

• Malou Tiquia, policy analyst and political strategist, offered a Latin phrase that translates to “the work is completed.”

• Opus efficitur. Remember the date, 07102020. #Boom

Pag-IBIG Fund offers promo rates on home loans to boost economy 

Top officials of Pag-IBIG Fund announced on Thursday (July 09) that they are offering promo rates on their home loans of as low as 4.985 percent per annum until the end of the year, in a move to help members acquire homes and help boost the national economy amid the pandemic.

The agency is offering special low rates of 4.985 percent per annum under a 1-year repricing period and 5.375 percent per annum under a 3-year repricing period. These are its lowest-ever rates under its Regular Housing Loan program, and are available to members getting new home loans until the end of 2020 only.

These further reduced the agency’s previous rates, already pegged at a low 5.375 percent per annum for the 1-year repricing and 6.375 percent per annum for the 3-year repricing period. Meanwhile, interest rates for its Affordable Housing Program, available for low and minimum-wage earners, remain at its lowest with a subsidized home loan interest rate of 3 percent per annum.

“By offering these special rates to our members, we are spurring economic activity in the housing industry, which has a ripple effect on the national economy. This is a win-win situation because our members get to take advantage of these home loan rates, while their purchase of their homes will help generate more jobs to help get our economy back on track.  This then, is our contribution to our nation’s journey to recovery, as led by President Duterte,” said Secretary Eduardo D. del Rosario of the Department of Human Settlements and Urban Development (DHSUD) and Chairman of the 11-member Pag-IBIG Fund Board of Trustees.

With the Pag-IBIG Board’s approval of the promo rates on July 9, Pag-IBIG Fund Chief Executive Officer Acmad Rizaldy P. Moti said that the special rates shall take effect immediately and shall be enjoyed by incoming home loan borrowers until December 29, 2020

“We review our rates regularly and have never repriced it upward under the Duterte administration. Our ever-improving quality of portfolio has allowed us to keep the rates low under our Risk-Based Pricing Model. But this time, we are offering something special. In consideration of the impact of the pandemic on the livelihood of our members, we reduced our home loan rates by as much 100 basis points for the next six months because we want to help members who are thinking of buying a home to take advantage of our lower-than-lowest rates.  Even amid the pandemic, now is the best time to buy a home with a Pag-IBIG Housing Loan” Moti said.

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