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Jollibee completes $600M bond sale

JOLLIBEE Foods Corp. (JFC) has completed its dollar bond market debut with the issuance of $600-million guaranteed senior perpetual capital securities by its wholly-owned subsidiary Jollibee Worldwide Pte. Ltd. (JWPL).

In a disclosure to the stock exchange Friday, the listed restaurant company said the transaction was completed on Thursday after proceeds were credited to JWPL’s account. The securities are scheduled for listing at the Singapore Exchange Securities Trading Ltd. on Friday.

“This transaction represents the first ever bond or perpetual securities issuance from JFC and the first time that JFC has tapped the capital markets since its Initial Public Offering in 1993,” the company said.

JFC said it originally planned to raise $400 million from the dollar-denominated bond issuance, but the offer was almost 10 times oversubscribed, pushing it to reach $600 million. This also resulted to a tightening of the final pricing to 3.9% from 4.25%.

“This marks the lowest pricing for a five-year perpetual securities issued by a Philippine company reflecting the strong demand for a JFC bond and the reputable credit standing of the company,” it said.

The securities are unrated and payable semi-annually. As perpetual bonds, the securities have no maturity date, meaning investors will not redeem their investments but will instead get a steady stream of interest payments.

JFC intends to use the proceeds from the offering to refinance its short-term debt after it acquired International Coffee and Tea, LLC last year, the operator of The Coffee Bean & Tea Leaf brand. The remainder will be used for general corporate purposes.

“The objective of management for this issuance is to further strengthen the balance sheet of JFC to build a stronger foundation for accelerating its growth in order to achieve its vision to become one of the top 5 restaurant companies in the world,” the company said.

In the first nine months of 2019, JFC’s earnings fell 26% to P4.53 billion due to losses in its operations of Smashburger and Red Ribbon.

Shares in JFC at the stock exchange gained P5.40 or 2.55% to close at P217 each on Friday. — Denise A. Valdez

Airlines ordered to cancel PHL flights to and from Wuhan

THE Civil Aeronautics Board (CAB) has ordered the suspension of all flights linking Wuhan, China and the Philippines to protect the country from the spread of the new flu-like virus.

In a statement Friday, the aviation regulator said it ordered all airlines to cancel such flights indefinitely, except those operated by Royal Air Charter Services and Pan Pacific Air, which are only allowed “for the sole purpose of ferrying their charter passengers back to Wuhan.”

Royal Air has flights linking to Wuhan on Jan. 24 and 27, while Pan Pacific Air has one scheduled on Jan. 25. The CAB allowed these trips to proceed as scheduled, provided the return flight from Wuhan will have no passengers and the airlines will “exercise extraordinary vigilance in ensuring the health and safety of its passengers and crews.”

The CAB has raised the alert on passengers coming from Wuhan after a Chinese boy in Cebu City tested positive for the new coronavirus earlier this week.

As of Friday, the virus has killed 26 and affected over 800 in China, Reuters reported.

While the suspension of flights is currently limited to those connected to Wuhan, the center of the outbreak, CAB Executive Director Carmelo L. Arcilla said the agency is continuously monitoring developments in other Chinese cities.

Arlines are also directed to monitor events and take necessary precautionary measures to arrest the spread of the virus.

Airline operator Civil Aviation Authority of the Philippines (CAAP) said it is likewise “closely monitoring” passengers from China, with special attention to the Kalibo International Airport where direct flights from Wuhan land.

In a statement, CAAP said its preparedness procedures for communicable diseases have been activated in international airports in Puerto Princesa, General Santos, Zamboanga, Davao, Kalibo, Laoag and Iloilo.

“Protocols are already in place in the airports where airport frontline personnel have been advised to wear face masks, maintain proper hygiene and practice regular handwashing. Posting of public advisories informing about coronavirus infections and the strict monitoring of suspected passengers are now also being enforced,” it said.

The Manila International Airport Authority, which operates the Ninoy Aquino International Airport in Manila, has also required the provision of a quarantine with space for health examination and the availability of hand sanitizers in the four terminals of the airport. — Denise A. Valdez

CHED chairman welcomes review of UP-Ayala lease contract

THE Commission on Higher Education (CHED) welcomed the government’s review of Ayala Land, Inc.’s (ALI) contract to develop a property of the University of the Philippines (UP) in Diliman, Quezon City.

President Rodrigo R. Duterte had ordered the review for possible “onerous” provisions, Presidential Spokesperson Salvador S. Panelo told reporters on Thursday.

In a statement on Friday, CHED Chairman J. Prospero E. De Vera III said he shares the concerns raised by the Commission on Audit (CoA), which observed that the lease contract for the UP-Ayala Land Technohub is “grossly disadvantageous to the government.”

“As a UP faculty member and former Vice President for Public Affairs, I share the concerns raised in the COA Report and look forward to a fair and impartial review,” he said.

The UP-Ayala Land TechnoHub is a joint development of the University of the Philippines Diliman and ALI.

Mr. Panelo earlier pointed out ALI is paying P22 per square meter (sq.m.) every month, based on an online source. ALI responded, saying it pays P171 per sq.m. a month.

Mr. De Vera said he will raise the issue at the UP Board of Regents on Feb. 3, encouraging the board to instruct all UP offices to provide necessary documents and interview individuals involved in transactions.

The TechnoHub contract is the second Ayala Group contract under review by the government, after Manila Water Co. Inc. The government plans to offer new contracts to Manila Water and Maynilad Water Services, Inc after reviewing the two water concessionaires for allegedly ”onerous” provisions in the previous ones. — Jenina P. Ibañez

BPI raises P15.3 billion from bond offer

BANK OF THE Philippine Islands (BPI) raised P15.3 billion in peso-denominated bonds following strong demand, marking its second largest issuance to date in the local debt market.

In a disclosure to the local bourse on Friday, the Ayala-led lender said the amount raised was more than five times its initial offer of P3 billion. It said the bank decided to upsize due to strong demand from both retail and institutional investors.

BPI said the bonds have a tenor of two years and carry an interest rate of 4.2423% per annum. Interest payments will be made quarterly while the principal will be settled at the maturity date.

This issue was the lender’s second largest peso bond issue next to the P25 billion bond issuance it had in 2018.

“The bonds have been issued, and are now tradable on the Philippine Dealing & Exchange Corp. (PDEx),” the bank said in the statement.

Earlier, the lender said the proceeds from the issue will be used to diversify its funding sources and also support its expansion plans.

BPI Capital Corp. was the sole selling agent for the bonds while Standard Chartered Bank’s Philippine Branch acted as a participating selling agent in the transaction. The two banks also served as the joint lead arrangers of the issue.

BPI in November 2018 raised P25 billion in fresh funds for the bank’s expansion plans, upsized from its initial guidance of P5 billion.

The fixed-rate notes carry a coupon of 6.797% per annum to be paid quarterly until March.

The Ayala-led lender also raised P3 billion via long-term negotiable certificates of time deposit (LTNCTD) in October last year. The notes have a tenor of five-and-a-half years and carry an interest rate of four percent per annum.

BPI booked a net income of P8.29 billion in the third quarter of 2019, jumping 38.6% from its profit in the comparable year-ago period.

In nine months to September 2019, the lender’s net profit was at P22.03 billion, up 29.5% from the P17.01 billion booked in the same period in 2018.

BPI shares inched up 0.43% or by 35 centavos to end at P82.25 apiece on Friday. — Beatrice M. Laforga

Banks’ lending standards mostly unchanged in the fourth quarter

MOST LENDERS maintained their overall credit standards for both enterprises and households in the fourth quarter, a Bangko Sentral ng Pilipinas (BSP) survey found.

The fourth quarter Senior Bank Loans Officers’ Survey of the central bank released on Friday showed the October to December period was the 43rd consecutive quarter when majority of the banks opted to keep their borrowing standards “broadly unchanged.”

For the said edition, 48 out of the 65 banks tapped for the poll responded, representing a response rate of 73.8%. Among respondents, 42 were universal and commercial banks and 23 were thrift banks.

The survey’s modal approach found that 84.8% of banks kept their loan standards for corporates, higher than the 81.6% with the same response in the third quarter of the previous year.

On the other hand, the diffusion index’s (DI) result pointed out to a net tightening of credit standards for enterprises. Respondent banks attributed to “their perception of stricter financial system regulations, deterioration in the profitability and liquidity of banks’ portfolios as well as in the profile of borrowers, and lower risk tolerance of respondent banks.”

“In terms of specific credit standards, the net tightening of overall credit standards was reflected in the reduced credit line sizes; stricter collateral requirements and loan covenants; and the increased use of interest floors,” the BSP said in the report.

“Banks’ responses likewise pointed to a net tightening of credit standards across all borrower firm sizes, namely, top corporations, large middle-market enterprises, small and medium enterprises (SMEs) and micro enterprises based on the DI approach,” it said.

Meanwhile, 89.7% of respondent banks also kept their overall credit standards unchanged for loans extended to households during the quarter, based on the modal approach. However, the DI approach likewise reflected a net tightening of credit standards for these kinds loans.

“The overall net tightening of credit standards for household loans was attributed by respondent banks largely to their more uncertain economic outlook, perceptions of stricter financial system regulations, and reduced tolerance for risk, along with a deterioration in borrowers’ profile,” the central bank said.

For this quarter, most of the respondent banks said they expect steady overall loan demand from firms and households,

Meanwhile, DI-based results show expectations of a net increase in credit demand from businesses and households.

“For business loans, the expected net increase in demand was associated largely with corporate clients’ higher working capital requirements,” the central bank said.

On the other hand, the expected net increase from household demand of loans was attributed to anticipation of higher household spending and “more attractive financing terms offered by banks.”

As for credit standards, banks said results based on the modal approach showed most respondent banks expect credit standards for firms to remain unchanged this quarter, while results based on the DI approach indicated expectations of continued net tightening of lending standards.

For household loans, both the modal and DI approaches showed expectations of steady credit standards “largely on account of respondent banks’ unchanged tolerance for risk and steady economic outlook, as well as expectations of unchanged profile of banks’ borrowers.” — LWTN

Moody’s affirms UnionBank’s credit rating

MOODY’S INVESTORS Service has affirmed its investment grade rating UnionBank of the Philippines, Inc., citing the bank’s robust capitalization and large pool of liquid assets.

In a statement on Thursday, the credit rater said they have affirmed UnionBank’s long-term local and foreign currency issue ratings of Baa2, a notch above the minimum investment grade and at par with the country’s credit rating.

Likewise, Moody’s said it has also affirmed the lender’s foreign currency senior unsecured rating of Baa2, foreign currency senior unsecured medium-term note (MTN) program rating of (P)Baa2, as well as Baseline Credit Assessment (BCA) and adjusted BCA of baa3.

In its assessment, Moody’s considered that the bank will have support from the government in times of need.

“The support assumption is predicated on UnionBank’s moderate market share in terms of deposits, which stood at around 3% as of Sept. 30, 2019,” Moody’s said.

Meanwhile, the affirmation of UnionBank’s BCA is on the back of the lender’s strong capitalization and large pool of liquid assets, Moody’s said.

“The BCA also incorporates the bank’s reliance on high-cost, confidence-sensitive time deposits for funding, as well as the rising asset risks associated with the bank’s growing retail franchise,” it added.

Moody’s noted that the Aboitiz-led lender has been banking on growing its “higher-yielding but riskier” loans disbursed to small and medium enterprises. This move is expected to lead to a gradual shift in the asset mix of the bank towards riskier assets in the next 12-18 months, it said.

The bank’s net profit hit P8.5 billion in January to September 2019, a 40% year-on-year jump from the comparable 2018 period.

UnionBank’s shares closed at P59.80 apiece on Friday, up by 1.18% or 70 centavos from its previous close. — LWTN

Peso rises on positive growth prospects

THE PESO strengthened on Friday on the back of continued optimism on the country’s growth prospects and as oil prices fell.

The local unit finished trading at P50.815 on Friday, strengthening by 16.50 centavos from its Thursday close of P50.98 per dollar.

It also appreciated by 7.60 centavos from its Jan. 17 close of P50.891.

The peso opened at P51 per dollar. Its weakest point for the session was at P51.01 while its intraday best was at its close of P50.815.

Dollars traded inched up to $1.082 billion from $981.95 million on Thursday.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion attributed the peso’s rise to fourth quarter gross domestic product (GDP) data reported on Thursday.

“It seems the market was upbeat on Q4 GDP results yesterday. Strength may have been also coming from positive expectations of 2020 economic growth,” he said in a text message on Friday.

Fourth quarter GDP growth clocked in at 6.4%, a pick up from the downwardly revised six percent growth in the third quarter. This put the 2019 growth average at 5.9%, which was behind the minimum 6% growth eyed by the government.

Finance Secretary Carlos G. Dominguez III has said he expects GDP growth to pick up this year on the back of the government’s spending catch-up.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the local unit climbed on the back of low global oil prices.

“Peso exchange rate closed stronger after lower global oil prices at new 1.5 month lows that could lower the import bill and trade deficit,” Mr. Ricafort said in a text message.

Reuters reported that oil prices fell 2% on Thursday as worries over the spread of the coronavirus from China point to lower fuel demand if it stunts economic growth. — L.W.T. Noble

Local shares end flat as China virus fears persist

By Denise A. Valdez, Reporter

LOCAL shares ended flat on Friday anud heightened worries across the globe over China’s coronavirus outbreak.

The benchmark Philippine Stock Exchange index (PSEi) inched up 7.06 points or 0.09% to close at 7,623.41. The broader all shares index gained 19.37 points or 0.43% to 4,523.57.

“Shares closed flat with some concerns regarding the severity of the Wuhan coronavirus. The World Health Organization concluded that it is now a local Chinese emergency, but the situation has not yet become a global health emergency,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message.

On Thursday, the WHO called the new coronavirus that killed 26 people in China “an emergency in China,” saying it was a “bit too early” to consider this a “public health emergency of international concern.”

More than 800 cases of the novel coronavirus have been reported globally. The Health department announced earlier this week that a Chinese boy traveling to Cebu City tested positive for coronavirus.

The Civil Aeronautics Board on Friday decided to suspend all flights connecting Wuhan to any point in the Philippines, with the exception of a couple charter flight operators that will be bringing back Chinese tourists to Wuhan until Jan. 27.

Chinese stocks slumped on Friday, as the Shanghai SE Composite index dropped 2.75% at the close. Other Asian markets ended mixed: Japan’s Nikkei 225 index climbed 0.13% and Hong Kong’s Hang Seng index grew 0.15%, while South Korea’s Kospi index lost 0.93% and Thailand’s SET 50 index shed 0.37%.

At the PSE, four sub-sectors performed positively on Friday. Mining and oil advanced 88.68 points or 1.13% to 7,968.19; property picked up 26.19 points or 0.66% to 3,962.32; industrial added 59.46 points or 0.62% to 9,728.72 and services increased 9.23 points or 0.60% to 1,544.66.

In the red were holding firms, which shaved 27.81 points or 0.38% to 7,348.36, and financials, which dipped 2.71 points or 0.15% to 1,810.37.

Some 847.15 million issues worth P5.72 billion switched hands on Friday, increasing from Thursday’s 669.94 million issues valued at P6.63 billion.

Foreign investors chose to stay away from the PSE on Friday, as net foreign selling grew to P556.51 million from P132.6 million on Thursday.

Former Agriculture Usec Segfredo Serrano on increasing productivity of Filipino farmers & fisherfolk

According to Former Agriculture Undersecretary Segfredo Serrano, the Philippine government should not forget to allocate budget for the basic things needed by local farmers and fisherfolk. These include research and development, technology promotion, access to markets, and a favorable regulatory environment. These, along with other measures, will help enhance the productivity and competitiveness of Philippine agriculture in the domestic and international markets.

Former Agriculture Usec Segfredo Serrano on trade negotiations

Former Agriculture Undersecretary Segfredo Serrano said international farm trade negotiations should be supported by expanding high-value crops exports.

 

Four Chinoy business practices to guide you into the Year of the Rat

Tomorrow marks a very important day for the Chinese community: the start of a new year, specifically: the Year of the Rat.

Considered one of the most auspicious signs for business due to its wit and perception, the Rat heralds what is widely expected to be a  great year for entrepreneurs.

In celebration of Chinese New Year, we asked young Chinoys to share some cultural business traits that they expect will carry them into a prosperous new year.

1. Diskarte or street smarts

When the Spanish started colonizing the country, the Chinese community faced much oppression in the form of various restrictions including taxes and predetermined residential areas. Through these experiences, Chinoys learned to succeed by making the most of what they have.

“For me, that’s really sticking to your roots, that you don’t get swayed… to gain brownie points if your business doesn’t need it,” said Rebecca Lee, social media analyst from an e-commerce company.

“That’s one thing that I want to emulate… remembering that sometimes people may want to withhold things from you but that’s not the end of the world.”

2. Frugality

Given these historical limitations, Chinoys also learned to save up– a habit that they carried with them even into prosperity. Since childhood, Kimberly Tiamlee, finance officer of her family’s construction business and co-owner of Pulseras ni Kim and Makers Café, had been trained to be frugal in her day to day life.

“I remember that when I started working, I would bring a packed lunch,” she said. “It was really important for me to do that because little things, they add up. A lot of people are excited for payday because they get to spend their money, but it’s different for me.”

“I’ve worked in corporate before and one the stark similarities I noticed between [non-Chinoys] and [Chinoys] is how we viewed money as a means, not an end,” said Lorina Tan, business unit head for baby care brand Tiny Buds. “It’s not unusual for co-workers to splurge on paycheck days while the Chinese people I’ve worked with tend to be more reserved with their money.”

3. Entrepreneurial mindset

Most Chinoy families run their own businesses, constantly finding ways to get the biggest bang out of their buck.

In this day and age, being an entrepreneur doesn’t necessarily translate to doing it full-time. Lee cites childhood friends who are able to juggle employment and operation of their own small businesses.

“Technology also affords us that kind of capability to not only be an employee but also have a small business that you grow from scratch,” she said. “You can be a good employee and have side hustles.”

4. The value of “face”

As entrepreneurs, Chinoys put high importance in the value of mianzi or “face”, which roughly translates to trust, honor, or dignity. This means upholding your image and trustworthiness through your words and actions, and following through with your obligations.

Tan learned the delicate dynamics of “face” through business deals. “In the beginning, as a new entrepreneur with a corporate background, there were times when I wanted everything on paper. Thankfully, my mom was there to guide me on when this is appropriate and when it could even harm a business relationship.”

“Now, I’m proud to say some of our closest partners are people we have a genuine friendship with,” she said. “It makes work so much more fulfilling to be able to do what you love with people you genuinely trust and care about. No piece of paper could ever do that.”

Energizing the country

Energy is one of the earmarks of modern living and convenience. Most households and businesses rely on it to run appliances and office equipment. When it comes to transportation and communication, energy is also essential for the use of electric trains, planes and various telecommunication devices. Even medical facilities at hospitals and clinics need energy for a more efficient medical practice.

The impact of energy to the advancement of human race is massive and unquestionable. It is the basis of existence, bringing the world to life. In the Philippines, in particular, December was declared as the National Energy Consciousness Month (NECM), spearheaded by the Department of Energy (DoE), to highlight the importance of energy in the daily lives of Filipinos and in the country’s economic development.

Similar to the previous celebrations, the recently held NECM 2019 was marked with various programs and activities. Anchored on the theme “Advancing Consumer Protection through Responsive and Proactive Energy Regulations,” it underscored the efforts of the “energy family” to uphold consumer welfare through increased awareness on energy matters, as well as the implementation of various programs, policies, guidelines, and rules that have been benefitting each and every Filipino.

DoE Secretary Alfonso G. Cusi assured that the entire energy family has been tirelessly working toward providing the entire archipelago secured, stable, reliable, accessible, and affordable energy services.

“Upholding the welfare of Filipino consumers is one of the core foundations of President Rodrigo R. Duterte’s administration. Time and again, the President has impressed upon us that the true spirit of public service lies in the ability of government to faithfully espouse and protect the best interests of our people. For the past three years, the energy family has been striving very hard to emulate this kind of service leadership through strategies, policies, and programs that anticipate and effectively respond to the energy needs of our countrymen,” Mr. Cusi was quoted as saying in a statement.

In line with the observance of the NECM 2019, DoE, through its Investment Promotion Office, held last Dec. 3 its final Energy Investment Forum (EIF) for the year. This annual event aims to provide local and international stakeholders with key updates on current investment opportunities and developments in the energy sector, as well as relevant energy investor experiences in project implementation.

About 300 participants from local electric cooperatives, energy generators, financial institutions, various government agencies, and local business groups attended the event.

Recognizing the need to break barriers to investments in the energy sector, Mr. Cusi said that DoE has established additional policies that would dispel fears of potential investors.

“Following the spirit of the Energy Virtual One Stop Shop law and the Energy Efficiency and Conservation Act, we issued the following: Omnibus Guidelines Governing the Award and Administration of Renewable Energy Contracts and the Registration of Renewable Energy Developers to harmonize and enhance existing guidelines and procedures governing the transparent and competitive system of registering and awarding RE projects; Qualified Third Party policy for our remote and off-grid areas; Battery Energy Storage System policy; and the IRR for the EE and C Act among the other policies released,” Mr. Cusi said.

Meanwhile, DoE, through its Energy Utilization Management Bureau, also launched the Energy Innovation Challenge last month as part of the activities for the NECM 2019. It was developed to encourage the Filipino youth, particularly the senior high and college students, to participate in the formulation of innovative solutions to existing and potential challenges within the energy industry.

“We want our students to have a say in the forging of their energy future. This Energy Innovation Challenge would give them the opportunity to contribute to the continuing development of the energy industry as early as now,” Mr. Cusi said.

Also held as part of the month-long celebration were the Energy Investment Forum; Energy Safety, Health and Environment Conference; and a Renewable Energy Expo.

The NECM, which coincides with the anniversary of DoE, is observed by the virtue of Proclamation No. 1427 signed on Dec. 11, 2007 by then President Gloria Macapagal-Arroyo.

Over the past years, DoE has been committed to its mandate of supervising all government’s plans, programs, projects, and activities relative to energy exploration, development, utilization, distribution and conservation. It is driven by its mission to improve the quality of life of Filipinos by formulating and implementing policies and programs to ensure sustainable, stable, secure, sufficient, accessible, and reasonably-priced energy.

In 2019, DoE ended the year with several milestones. These include policies and programs on energy security such as the Philippine Conventional Energy Contracting Program and the issuance of a circular covering the general framework on ancillary services. The Energy department was also able to issue an order allowing the direct remittance of financial benefits to hosts of power generation and energy resource development projects. Moreover, it also initiated activities related to the further development of renewable energy. — Mark Louis F. Ferrolino

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