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Phil Mickelson hasn’t been consistently good for a while now. Arguably, he started the year on a high; he claimed a bridesmaid finish at the Desert Classic in January and then a victory at the AT&T Pebble Beach Pro-Am three weeks later. Yet, even then, there were signs that he would have trouble staying sharp; for instance, his competitive stints sandwiched a missed cut at the Waste Management Phoenix Open, where he had previously won thrice. He would wind up tinkering with his swing off the tee and stroke on the greens as he negotiated his 2019 campaign, and his results underscored both the causes and effects of his efforts to find comfort in his mechanics.

Following a 32nd-place showing at The Northern Trust, Mickelson dropped four spots to 36th in world rankings. It reflected his continuing — and so far futile — search for peace inside the ropes. Every week, he would start a tournament with promise, and, every week, he would end it with disappointment; his win at the Monterey Peninsula was the last time he handed a scorecard good enough to be in the Top 10. Meanwhile, he would accumulate seven MCs in 15 events, with a tie for 18th at the Masters his best standing of all the stops in which he managed to stay for the weekend.

Mickelson isn’t about to give up anytime soon, though. In fact, he remains optimistic about his chances with a club in his hand, his confidence borne as much of a rightful recognition of his outstanding short game as of his contentment in his life outside the sport. He’s not the people’s champion for nothing, and his public persona — which may or may not be genuine depending on the quarter assessing it — has thrived precisely because of the warmth he conveys. In fact, he understands the value of spreading good cheer, and how to do so with aplomb.

By the standards of household names, Mickelson has a modest following on Twitter. Considering that his account isn’t even a year old, however, 414,000 is nothing to scoff at. And, regardless, it has become well worth the constant lookup. The other day, for instance, he posted a video in which he recounts the final round of — what else? — the AT&T Pebble Beach Pro-Am in 2012, by his reckoning one of only three times he beat Tiger Woods on the course. It was a humorous take that guest-starred former Cowboys quarterback Tony Romo and a digital photo frame of his longtime rival. Lots of needling, self-deprecation, and, most importantly, insights in a span of two minutes and change.

Under the circumstances, Mickelson doesn’t have to be told that his Twitter game is much, much better than his actual one. If anything’s a sure thing, though, it’s that he will strive to be at his finest in both. And fans of his golf and his unique brand of comedy and candor can’t ask for anything more.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

Go Motion: Led by vision, backed by technology

Many businesses have become successful through the guidance of their vision and the help of proper tools and technologies. This is true for Go Motion, a production house based in Makati City, founded in 2012 by six people who shared a grand goal.

“We had a vision for what a 21st-century production house could be — full of creative talent that works on groundbreaking work. We wanted to be the change we wanted to see in our industry,” said EJ Angeles, co-founder of Go Motion.

From its humble beginnings as a corporate media supplier, Go Motion expanded its services one step at a time. In 2015, it started producing television commercials for top brands in the Philippines and abroad. Soon after, they included creative and strategic planning in their wide range of services

Go Motion has also started producing films and shows. Notably, in 2017, it created Playhouse Studio, an innovation unit tasked to break new grounds in video design, technology, and consumption.

As much as Go Motion expanded its services, it has catered to many local and international brands and even pitched content for many streaming services. Its great work through time earned them prestigious awards inside and outside the country.

This profound growth of Go Motion into an integrated video agency was possible through the vision they carried with them. For Mr. Angeles, Go Motion’s vision was not only their starting point. It has been their guiding star.

Along with the vision, technology has served as Go Motion’s tool in building up and growing their business. Technology has helped them not only in terms of production but also in terms of task management.

“Technology has enabled us to take out menial tasks from some of our employees such as traffic managers, production managers, producers, film directors, editors in post production, all the way to staff in support services,” Mr. Angeles explained. “Technology helps us both ways: make our work easier, better, more time-efficient; and at the same time create things we have never thought of creating three to five years ago.”

As Go Motion has successfully reached where they are now, they still aim for greater heights.

“We envision our work to be on every screen — may it be television, your laptop, mobile phone, out of home billboards, movie theaters, everywhere. That’s where we know we have made it,” Mr. Angeles said.

“When we have made it, we want to pave the way for our employees to have ownership on our company so that it continues — even without its founding members — to grow and have high impact work not only in the Philippines but in the ASEAN market,” he added.

Indeed, a great vision and workable technology can work together to make a business grow. This is possible with Globe myBusiness, which equips micro, small and medium businesses for the future, with best value products and solutions.

As the SME arm of Globe, it is the goal of Globe myBusiness to help every enterprise reach its full potential through industry-specific tips, lessons from experts in the field, and business solutions tailored to answer every business owner’s needs. Globe myBusiness salutes Filipino SMEs for the important role they play in nation-building. #SaludoSMEs

For more information, visit Globe myBusiness website.

May FDI net inflow smallest in 4 years

By Mark T. Amoguis
Senior Researcher

MAY was marked by a net inflow of foreign direct investments (FDI) that was nevertheless the smallest in more than four years, the central bank reported on Tuesday.

FDI net inflows dropped 85.1% to $242 million in May from $1.625 billion in the same month last year, preliminary central bank data showed.

It was the smallest net inflow since March 2015’s $200 million.

The Bangko Sentral ng Pilipinas (BSP) noted that net investments in debt instruments contracted by 88.6% to $149 million in May “due mainly to higher prepayments and repayments of debt owed by local affiliates to their foreign counterparts, coupled with a decline in their borrowings from their foreign affiliates.

The BSP also noted “moderate” net inflows of equity capital, which plunged 99.6% to a mere $1 million that month, as placements declined 71% to $74 million while withdrawals surged nearly fivefold to $73 million.

The central bank said equity capital placements in May came mainly from the United States, Japan, China, Hong Kong.

In May, these capital infusions went largely to real estate; manufacturing; financial and insurance; construction; as well as human health and social work industries.

Reinvested earnings, meanwhile, went up 15.9% to $92 million.

YEAR-TO-DATE DROP
Year-to-date, FDI net inflows reached $3.145 billion in the five months to May, dropping 37.1% from the past year’s $5.002 billion.

This was mainly due to a 76% year-on-year drop in net equity capital investments to $336 million from $1.4 billion in the same comparative five month periods, as placements contracted by 48.9% to $787 million from $1.539 billion while withdrawals jumped more than threefold to $451 million from $139 million.

Net investments in debt instruments similarly decreased 26% year-on-year to $2.391 billion from $3.232 billion.

In the first five months, equity capital placements came from Japan, the US, China, Singapore, and South Korea and were largely channeled to the financial and insurance sector, real estate, manufacturing, transportation and storage, as well as administrative and support services.

FDIs are a source of capital for the Philippine economy, spurring domestic activity by funding business expansion and generating more jobs.

From a record high of $10.256 billion in 2017, FDI net inflows dropped 4.4% to settle at $9.802 billion last year.

The central bank projects net foreign direct investments to reach about $10.2 billion this year.

Grab gets more time to address concerns

THE STATE antitrust watchdog has extended its monitoring of Grab Philippines, citing “lingering competition concerns” a year after the company got conditional clearance for its acquisition of Uber’s operation in the country.

In a statement on Tuesday, the Philippine Competition Commission (PCC) said it has extended the effectivity of Grab’s voluntary commitments to Oct. 20 to allow for talks on new or amended commitments that will be effective for another period still to be agreed on.

“Exactly a year after PCC rendered a Commitment Decision on Grab’s acquisition of rival Uber on August 10, 2018, the competition authority finds that the dominance of the merged firms remains unchallenged and competition has not improved in the ride-hailing market,” the watchdog said in its statement.

After raising competition concerns when Grab bought Uber’s Southeast Asia business last year, the PCC gave the merger a conditional clearance, subject to a year-long monitoring of Grab’s voluntary performance commitments involving improvement of service quality, fare transparency, maintaining pricing comparable to the level before its acquisition of Uber’s Southeast Asia business, removal of a “see destination” feature for drivers, driver and operator non-exclusivity, incentives monitoring and an improvement plan.

“These commitments are designed to maintain conditions in the market as if Uber or another competitor were present to set a competitive constraint on Grab,” PCC said in its statement.

“The commitments were also meant to prevent Grab from making it difficult for new players to enter and grow in the ride-hailing market.”

The one-year monitoring period lapsed last Saturday, but PCC Chairman Arsenio M. Balisacan cited a need for a new set of commitments that is “fair and reasonable and that protects consumers from Grab’s currently unchallenged dominance in the market.”

The watchdog said the new commitments may be similar to the old ones, but with adjusted metrics.

“We… hope to raise the level of competitive intensity in the market and bring about market conditions conducive to new entrants,” the statement quoted Mr. Balisacan as saying.

Grab Legal Counsel Erasto Miguel G. Aguila told reporters in a Viber message that the company is “discussing with the PCC… how to proceed moving forward.”

The PCC said should it fail to finish talks with Grab on new commitments by Oct. 20, it will reevaluate the conditional clearance it gave the company for its acquisition of Uber’s business in the country.

“On one hand, the commitments can keep Grab in check from exercising its market power as a virtual monopolist. On the other hand, we also advocate for allowing smaller players to grow or formidable new competitors to enter the market which will be more beneficial to the riding public,” Mr. Balisacan said. — Denise A. Valdez

DBCC to check assumptions anew

THE INTERAGENCY Development Budget Coordination Committee (DBCC) plans to meet again on Aug. 27 to consider “new” macroeconomic assumptions like inflation, the central bank chief said on Tuesday.

“… [M]ay meeting ang DBCC… sa Aug. 27… tentative… to look at new assumptions. Baka maga-adjust na naman ng inflation doon (Inflation assumptions may be adjusted again in that meeting),” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno told reporters on the sidelines of an event in Quezon City, adding that the meeting will focus on 2020 and 2021 assumptions.

The DBCC last met on July 18, during which it cut inflation and international trade assumptions but kept overall economic growth targets intact.

On Aug. 6, however, the government announced July inflation at a 31-month-low 2.4% and two days later reported that second-quarter economic growth clocked in at 5.5%, the slowest in four years.

Asked if latest economic growth data will be factored in at the next meeting, Mr. Diokno replied: “Hindi na ‘yan eh. Sa tingin ko blip lang ‘yan eh… (It won’t, I think it was just a blip.) It won’t happen again.”

The DBCC, which is composed of the Department of Budget and Management, the Department of Finance, the National Economic and Development Authority, the Office of the President and the BSP, sets macroeconomic and fiscal assumptions of the government.

Asked about factors that could affect assumptions in the upcoming meeting, Mr. Diokno said: “Possible slowdown, in fact, some predicted recession in the US… this is for 2020-2021. Tapos ’yung oil prices ngayon bagsak na naman. Tapos ’yung likely outcome US-China trade war. Tapos isasama mo na rin diyan ‘yung what’s happening in Hong Kong (Oil prices have gone down again. Then the likely outcome of the US-China trade war and what’s happening in Hong Kong).”

In its 176th meeting last July 18, the DBCC slashed inflation rate assumption to 2.7-3.5% from 3-4% previously amid a cooling general increase in prices of widely used goods and services after multi-year highs seen last year. Inflation assumptions for 2020 up to 2022, when President Rodrigo R. Duterte ends his six-year term, were maintained.

The interagency body revised upward its peso-dollar outlook to P51-53 against the greenback this year from P52-55 previously.

Merchandise export growth assumption was trimmed to two percent this year from six percent previously due to slowing global demand, but maintained at six percent from 2020 to 2022.

Likewise, goods import growth was slashed to seven percent this year from nine percent previously but kept it at eight percent from 2020 to 2022.

Growth of service export assumption was reduced to nine percent for this year from 10% and set also at nine percent from 11% previously for 2020 to 2022, while service import growth was trimmed to three percent this year from five percent, to four percent for 2020 from six percent, and to five percent for 2021 to 2022 from seven percent previously.

The assumption for dollar price of Dubai crude oil — used as a benchmark for local fuel products — was maintained at $60-75 per barrel for 2019-2022.

At the same time, gross domestic growth targets were maintained at 6-7% for this year, at 6.5-7.5% in 2020 and at 7-8% in 2021-2022.

The DBCC also maintained projected revenues at P3.15 trillion for this year, equivalent to 16.4% of GDP, while disbursements are targeted at P3.77 trillion (down slightly from P3.78 trillion as of March projections), or 19.6% of GDP.

For next year, state revenues are seen to increase to P3.54 trillion (down from P3.676 trillion in the previous projection), equivalent to 16.7% of GDP, while disbursements are programmed at P4.21 trillion (down from P4.313 trillion), equivalent to 19.9% of GDP.

Given this fiscal picture, the budget deficit ceiling will be kept at equivalent to 3.2% of GDP this year, and slightly raised to that level from 2020 to 2022 from three percent as of March projections. — Mark T. Amoguis

BSP to ‘pre-announce’ action on banks’ reserve requirement

THE BANGKO SENTRAL ng Pilipinas (BSP) will “pre-announce on a quarterly basis” its intention on banks’ reserve requirement ratio (RRR) in order to prepare markets, BSP Governor Benjamin E. Diokno said on Tuesday.

“The consensus of Monetary Board (MB) members is we will pre-announce on a quarterly basis,” Mr. Diokno said on the sidelines of an event in Quezon City when asked on succeeding reductions in banks’ RRR.

“Hindi naman ‘yung sasabihin ko na for the next three years eto ’yung five percent [cut] every quarter. Walang ganon. Quarterly… We will pre-announce kung anong gusto namin (We will not say that we will cut the RRR by five percent every quarter for the next three years. It’s not like that. We will pre-announce quarterly what we intend to do)” he said.

“We will pre-announce it para hindi nagugulat. Na-appreciate naman nila ‘yun, ‘di ba? Para mawala na rin ‘yung… everyday na lang nag-e-speculate (We will pre-announce it so that the market will not be caught off-guard. They appreciate that, don’t they? So that we can minimize market speculation),” said the central bank chief, who sits as the chairman of the policy-setting Monetary Board.

“Meron pa kaming six weeks eh. Puwede ring hindi, puwedeng at the end, puedeng hindi at the end. Depende (We still have six weeks until the Monetary Board’s Sept. 26 policy review. We might not cut the RRR, we might do so at the end of the six weeks, we might not cut at the end. It depends).”

In non-interest rate-setting meetings last May, the MB implemented a multi-phased 200 basis point reduction in RRR to 16% for big banks and to six percent for thrift banks by the end of July.

The central bank chief has committed to paring the RRR down to single-digit level when he ends his term — the remainder of the six-year term of the late BSP Governor Nestor A. Espenilla, Jr., who died last Feb. 23 — in July 2023.

Mr. Diokno said that RRR reduction is a “live issue” in MB meetings “in the sense that we can take it up anytime.”

“’Di ba kakatapos lang ng July, may August pa tayo (July has just ended, we still have August), so… we just look at how it (freed-up funds) was used… liquidity constraints and then we’ll consider other proposals,” he said.

The timing of RRR cut, Mr. Diokno has said, will still depend on liquidity, as the BSP watches if reductions earlier this year — which are estimated to have released more than P200 billion into the system — spurred lending to productive economic activities.

The central bank announced on July 31 that money supply growth steadied at 6.4% year-on-year to about P11.78 trillion in June — and edged up by about 0.3% month-on-month — even as it trimmed lenders’ RRR, the last phase of which took effect on July 26.

Mr. Diokno said late last week that another RRR cut could take place “next month”, adding that it could be decided in any of the Monetary Board’s weekly meetings.

He had also said that another 25 bp cut in benchmark interest rates could be on the table during the Sept. 26 policy review, which will be the sixth for this year. — Mark T. Amoguis

Ayala group profit surges to P38B in six months

By Arra B. Francia, Senior Reporter

EARNINGS of Ayala Corp. (AC) more than doubled in the first half of 2019, boosted by divestment gains from its education and energy businesses.

In a regulatory filing, the listed conglomerate said net income attributable to the parent grew 135% to P37.84 billion in the six-month period. Revenues also went up 8% to P160.38 billion. The company did not disclose second-quarter figures.

AC attributed its performance to the twofold increase in equity earnings from its business units to P41.7 billion. This includes divestment gains from AC Education, Inc.’s merger with Yuchengco-led iPeople, Inc., as well as its partial divestment from AC Energy, Inc.’s thermal assets.

AC Energy in June agreed to transfer its assets in the 552-megawatt GNPower Kauswagan’s (GNPK) coal-fired power project to its partner, Power Partners Ltd. Co. The deal will be implemented in tranches, subject to certain closing conditions and approval from the Philippine Competition Commission.

“Our first-half results reflect the strength of our core holdings in real estate, banking, and telecommunications. This was complemented by the value realization initiatives in our energy business,” AC President and Chief Operating Officer Fernando Zobel de Ayala said in a statement.

AC’s business units include Ayala Land, Inc. (ALI), Bank of the Philippine Islands (BPI), Globe Telecom, Inc., Manila Water Co., Inc., AC Energy, and AC Industrial Technology Holdings, Inc.

For the property segment, ALI’s net income climbed 12% to P15.2 billion after a 4% increase in revenues to P83.2 billion. The listed company benefited from higher office sales and the double-digit growth of its commercial leasing segment.

ALI faced delays in securing permits for real estate projects during the semester, leading to only P19.5 billion worth of launches against its P130-billion target for the entire year. The company is optimistic it can unveil about P111 billion worth of projects in the second half to ramp up its inventory.

Meanwhile, BPI’s net income grew 25% to P13.7 billion. Revenues went up 23% to P45.9 billion, thanks to margin expansion and the growth of its fee-income business.

Earnings of Globe Telecom went up 21% to P12 billion for the same period, following continued demand for data-related services. Service revenues were up 13% to P72.9 billion, driven by data revenues which accounted for 70%. Its prepaid segment also pushed mobile revenues 11% higher to P54.6 billion.

Manila Water’s profit fell 18% to P2.9 billion due to supply challenges during the semester. The east zone concessionaire said the water shortage led to higher operating expenses and lower billed volume, offsetting the 7% increase in revenues to P10.5 billion.

AC Energy’s net profit stood at P23.2 billion, primarily driven by the partial sale of the GNPK project.

On the other hand, AC Industrials recognized a net loss of P510 million for the period, dragged by the global slowdown in the automotive industry, geopolitical risks in the United Kingdom and China, as well as weaker sales from its Honda, Isuzu, and Volkswagen brands.

Shares in AC rose 0.21% or P2 to close at P940 apiece on Tuesday.

SMC taps 3 foreign firms to design new airport

SAN MIGUEL Corp. (SMC) has tapped three foreign companies for the design and construction of its proposed P734-billion international airport in Bulakan, Bulacan.

The company said in a statement Tuesday it is working with Groupe ADP (Aeroports de Paris), Meinhardt Group and Jacobs Engineering Group for the Bulacan airport project.

These firms are known to have worked on Changi Airport in Singapore, Charles de Gaulle Airport in France and Hartsfield-Jackson Atlanta International Airport in Georgia, United States.

“This is our biggest investment in a single project to date, one that will definitely impact the lives of millions of Filipinos and the country in general — all the more reason for us to push for greater sustainability and choose the best people to work with us,” SMC President and Chief Operating Officer Ramon S. Ang said in the statement. SMC said it is also looking for a “world-class airport operator” to handle the operations and management of the proposed gateway.

San Miguel Holdings Corp.’s (SMHC) proposed New Manila International Airport, located in Bulacan, is eyed to become an alternative to the Ninoy Aquino International Airport. The SMC unit is proposing to build a 2,500-hectare airport with four to six parallel runways that will have an annual capacity of 100 million passengers.

SMHC is expected to receive from the government the Notice of Award for the project within the week, after which it must comply with documentary requirements within 20 days.

The transportation department earlier said it targets the formal award of the project to SMHC by early September, and for the construction of the airport to begin by the fourth quarter of the year.

On concerns about the livelihood of the fisherfolk to be affected by the airport’s location, Mr. Ang said SMC will make sure the community will be relocated to better homes.

“We are in the process of identifying areas where together we can build a fishing community that will last for generations to come,” he was quoted as saying.

“With a major international airport at their doorstep, fisherfolk, microentrepreneurs, and local businesses will have a huge, ready market for their products, and even a means to ship them to other provinces or export them,” Mr. Ang added. — Denise A. Valdez

Travellers International Q2 income declines

THE owner and operator of Resorts World Manila (RWM) posted a 52% drop in attributable profit for the second quarter of 2019, weighed down by higher borrowing costs.

In a regulatory filing, Travellers International Hotel Group, Inc. (TIHGI) booked P600.27 million from April to June, less than half the P1.24 billion in the same period a year ago. This came amid a 45% increase in gross revenues to P8.08 billion.

The listed firm traced the decline to higher finance charges and depreciation expenses.

For the first semester, attributable net income was halved to P844.71 million, even as gross revenues surged 50% to P16.57 billion.

The company noted that higher revenues were due to the increase in gaming capacity at the RWM complex. It now has a total of 2,203 gaming units from a combination of VIP tables, mass tables, slots, and electronic table games, compared to 1,932 in end-2018.

With this, gross gaming revenues for the first half jumped 50% to P13.54 billion.

Meanwhile, non-gaming revenue rose 52% to P2.31 billion following higher occupancy rates and more hotel rooms launched in the area. The company started operations of Hilton Manila late last year and Sheraton Manila in the first quarter, adding 747 new hotel rooms for a total of 2,201 by end-June.

Average occupancy rate in RWM’s five hotels stood at 78%.

TIHGI will continue to expand RWM with the completion of its Grand Wing facility by the end of 2019, which will add two levels of gaming, entertainment, and retail spaces. It will also open Hotel Okura Manila by the first quarter of 2020.

Shares in RWM slipped 0.37% or two centavos to close at P5.43 each on Tuesday. — Arra B. Francia

Cosco Capital’s earnings get a boost from Liquigaz sale

COSCO Capital, Inc. registered a 273% increase in attributable profit for the first half of 2019, boosted by sale of its liquefied petroleum gas (LPG) business.

In a statement issued Tuesday, the listed holding firm of tycoon Lucio L. Co said net income attributable to the parent rose to P9.88 billion in the January to June period. This includes a one-time gain from its divestment in Liquigaz Philippines Corp.

Cosco signed in October last year a share purchase agreement for the sale of all its shares in Liquigaz to Fernwood Holdings, Inc., in a bid to increase financial flexibility.

Excluding the sale of Liquigaz, core attributable net income increased by 8.6% to P2.67 billion. Revenues were flat at P76.72 billion.

The company did not provide second- quarter figures.

The grocery retailing business through Puregold Price Club, Inc. and S&R Membership Shopping Club, accounted for 54% of profit, followed by the commercial real estate segment, liquor distribution unit, and specialty retailing segment at 23%, 17%, and 2%, respectively.

Consolidated income from the grocery retail segment slipped 4.8% to P2.82 billion, even as consolidated revenues increased 11.3% to P71.1 billion. Without the one-time gain from the sale of its equity investment in Lawson convenience stores, core net income rose 8.4%.

Puregold booked same-store sales growth (SSSG) of 6.2% for the first half, while S&R’s stood at 9.3%.

“Our SSSG in the first half of 2019 is driven by higher consumer spending fueled both by minimum wage inflation in 2018 and easing inflation in 2019,” Puregold said in a separate statement.

The company opened 12 new stores during the semester, as well as one S&R Warehouse Club, bringing its total network to 419 stores.

Net income from the liquor distribution business grew 20.8% to P457 million. Revenues added 21% to P4.5 billion, following a 31% uptick in volume of cases sold mostly from its Alfonso Light Brandy and Alfonso Brandy brands.

Earnings from the commercial real estate segment rose by 11.4% to P637 million on the back of a 4.6% increase in revenues to P2.7 billion.

Office Warehouse, Inc., which makes up the specialty retailing business, delivered a 67% net income increase to P54 million. Revenues also climbed 20.9% to P1.22 billion, driven by SSSG of over 15% from its network of 91 stores.

Shares in Cosco fell 1.62% or 11 centavos to close at P6.66 apiece at the stock exchange on Tuesday, while shares in Puregold shed 0.56% or 25 centavos to P44.50 each. — Arra B. Francia

Gov’t fully awards offer of 10-year bonds

THE GOVERNMENT fully awarded the reissued 10-year Treasury bonds (T-bond) it offered on Tuesday, with rates dropping following signals from the central bank chief on another policy rate cut and further reductions to lenders’ reserve requirement ratios (RRR).

The Bureau of the Treasury (BTr) raised P20 billion worth of T-bonds yesterday with the offer more than three times oversubscribed, as tenders amounted to P65.2 billion.

The 10-year T-bonds, which carry a coupon rate of 6.875% and have a remaining life of nine years and five months, fetched an average yield of 4.196%, 144.8 basis points lower than the 5.644% quoted when the papers were last offered on May 28.

At the secondary market yesterday, the debt notes were quoted at 4.303%, based on the PHP Bloomberg Valuation Service Reference Rates.

Following the auction, National Treasurer Rosalia V. De Leon said yields were lower as expected following the central bank’s rate cut last week and dovish statements from Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.

“We expect that rates would be coming down given the pronouncements by the Governor and of course…the Monetary Board (MB) last Thursday reduced policy rates by 25 basis points. Coming from the Governor, they’re looking at possible RRR cut in September or within the fourth quarter,” Ms. De Leon told reporters.

At its fifth review for the year on Thursday, the central bank’s policy-setting MB cut benchmark rates by 25 basis points, bringing the overnight reverse repurchase rate to 4.25%, and the overnight deposit and lending rates to 3.75% and 4.75%, respectively.

This followed a “prudent pause” in June as well as a 25-bp cut last May that partially dialed back a cumulative 175-bp hike implemented through five meetings last year in order to arrest rising inflation that peaked at a nine-year-high 6.7% in September and October.

In a Bloomberg interview last Friday, Mr. Diokno said policy makers may slash key rates further in their next meeting in September or in the first few weeks of the fourth quarter.

In a separate interview with ABS-CBN News Channel, Mr. Diokno said banks’ RRR may be reduced by another 100 basis points before the Sept. 26 policy meeting.

Mr. Diokno said the already reduced RRR, which is currently at 16% for big banks after the phased 200-bp cut, “is still very high.”

Yesterday, the BSP chief said the policy-setting Monetary Board is looking to announce planned phased RRR cuts ahead of time on a quarterly basis to reduce market speculation.

Sought for comment, a trader also attributed yesterday’s auction results to “the possibility of more cuts on both policy rate and RRR.”

“Eventually, they’ll look again at rate cuts so they’re taking the opportunity right now to also lock in hopefully for the 10 years,” the trader said.

The trader added that demand was strong amid the escalation of the trade dispute between the US and China.

Last week, the People’s Bank of China devalued its own currency to 7 against the dollar in retaliation against Washington’s plan to impose an additional 10% tariff on $300 billion worth of Chinese goods starting Sept. 1.

Tensions between the two countries escalated further after the US called China a “currency manipulator.”

The government plans to borrow P230 billion from the domestic market this quarter through Treasury bills and T-bonds.

It is looking to raise P1.189 trillion this year from local and foreign sources to fund its budget deficit, which is expected to widen to as much as 3.2% of gross domestic product. — Beatrice M. Laforga

Affordable housing business lifts Century Properties’ bottom line

CENTURY Properties Group, Inc. (CPG) saw its attributable profit surge by 108% in the second quarter of 2019, driven by higher contribution from its affordable housing segment.

The Antonio-led property developer told the stock exchange its net income attributable to the parent hit P336.75 million in the three months ending June, following a 59% increase in revenues to P2.67 billion.

This brought net income attributable to the parent to P704.56 million during the January to June period, 63% higher year on year. Six-month revenues were also up 24% to P5.45 billion.

“We expect this positive momentum to continue as revenues from our expansion plans have started contributing significantly and steadily to CPG’s bottom line even as our existing in-city projects still significantly provide a stable revenue stream,” CPG Chief Finance Officer Ponciano S. Carreon, Jr. said in a statement.

Mr. Carreon said the affordable housing business now generates 12% of CPG’s total revenues. This is expected to increase further as they complete more projects within the year.

CPG has partnered with Japan’s Mitsubishi Corp. for PHirst Park Homes, Inc., a company focused on providing affordable housing in the provinces. It plans to roll out 15 masterplanned communities worth P57 billion in the next five years.

Meanwhile, the company booked revenues from three condominium projects worth P7 billion completed in 2018. This includes Boracay Tower in Azure Urban Resort Residences in Parañaque, Osmeña East Tower at The Residences in Quezon City, and Iguazu Tower at Acqua Private Residences in Mandaluyong. It will complete two more buildings in the fourth quarter.

For the office segment, CPG is set to complete the Century Diamond Office Tower in Makati covering 63,110 square meters (sq.m.) in gross floor area (GFA). This is part of the company’s goal to reach 300,000 sq.m in GFA with projected revenues of P2 billion by 2020.

“We expect that the encouraging performance of our core businesses coupled with cost reduction measures and improvement in our operating efficiencies will help sustain our double-digit NIAT (net income after tax) growth for the next three to four years,” Mr. Carreon said.

Shares in CPG dropped a centavo or 1.82% to close at 54 centavos each at the stock exchange on Tuesday. — Arra B. Francia

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