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Think tank: SMGPH faces liquidity crunch
The declining profitability of San Miguel Corporation’s energy unit San Miguel Global Power Holdings Corp. has affected the capability of the company to meet near-term financial obligations, according to a report of the Institute for Energy Economics and Financial Analysis, or IEEFA. Local groups held a forum on Wednesday ahead of the 133rd anniversary of the Adian conglomerate that focused on the “losing strategy” of maintaining its dependence imported fossil fuel with its planned shift from traditional coal to liquefied natural gas, or LNG. Think tank Center for Energy, Ecology and Development indicated during the event that SMGPH is implementing “a losing strategy that is having devastating consequences on shareholders and investors, energy consumers, and the environment.” “While SMC is pursuing the country’s further dependence on fossil fuel, it is also losing on the actual energy transition development. SMC had lost in the race to secure new permits for renewable energy capacity, which will be built in the next two to three years,” Gerry Arances, CEED executive director, said. Sam Reynolds, author of an Institute for Energy Economics and Financial Analysis, or IEEFA, report titled San Miguel Global Power: Fossil fuel-oriented growth strategy raises financial red flags, said the article detailed the financial issues SMC faces because of its reliance on coal and gas. IEEFA is a Detroit-based advisory group for energy industry strategies. He warned the company’s overexposure to volatile fossil fuel prices could sink its financial health and that “SMGPH’s overreliance on fossil fuels has weakened its financial health — moving from coal to LNG is not going to solve the fundamental problem of overexposure to fossil fuel prices.” SMGPH debts are falling due between 2024 and 2026, according to the study. The company’s financial position would likely remain inadequate to address the callable perpetual securities, amounting to $3.4 billion (P193 billion). “SMGPH could face a double-edged sword. On one hand, the need to redeem perpetual securities demands additional capital or funding. On the other, opting not to exercise the call option subjects the company to additional financial costs, further straining its financial position,” according to IEEFA. No contract to back up projects “This is especially true when you consider the company’s lack of contracts for its existing and proposed LNG facilities,” he added. SMC’s status as one of the country’s biggest conglomerates entails that the company should be among those leading the transition away from fossil fuels, Reynolds added. Reynolds also doubts the company will be able to fulfill the 2050 net zero commitment it unveiled earlier this year. “Unless there is a major, material pivot within the company to transition to renewables and phase out its fossil fuel expansion plans, the company is going to have very little chance of achieving its 2050 net zero target. Without a strategic, material, immediate pivot, that goal is simply unrealistic,” he said. Liquidity crunch possible As a result of SMGPH’s declining profitability, IEEFA’s analysis indicated that its ability to cover near-term financial commitments in the form of debt, interest and capital distribution for perpetual securities may have worsened considerably. This points to an overall liquidity crunch, which could translate to a longer-term funding shortfall if not carefully managed. IEEFA indicated that its view “aligns with conclusions from Bloomberg Intelligence, which stated that the company may need $900 million (P51 billion) by the end of this year to meet its financial commitments. “SMGPH’s funding constraints also depend on its ability to extend P21 billion worth of short-term loans. There is also a possibility of obtaining local funding due to its connection to parent company SMC,” IEEFA indicated. Its financial SMGPH’s perpetual securities come with a notable feature: a step-up interest mechanism. If the call option on the security is not exercised, the interest rate increases by a certain percentage each year. SMGPH has strategically tapped into the issuance of bonds and loans to fund its expansion plans, increasing its total debt. Total equity has also grown, driven largely by the company’s issuance of perpetual securities. The paper added that a broader assessment, beyond operating cash flows, reveals a rising liquidity risk for SMGPH. It measured the SMGPH’s cash flow from operations (CFO)-to-current liabilities ratio, the results of which pointed a “concerning trend.” The ratio has been on a downward trajectory since 2019. In 2022, the CFO-to-current liabilities ratio plummeted to an all-time low of -0.12, indicating insufficient cash flow to cover short-term liabilities. The same ratio remained weak in the first half. Its ratio in 2022 was 1.00, down from 1.43 in 2021, meaning the company has exactly one dollar of current assets for every dollar of current liabilities. “In essence, the company holds a relatively tight margin of assets available to cover its immediate financial obligations. Meanwhile, the accounts receivable turnover ratio stood at 3.15, marking its lowest value since 2016.” The post Think tank: SMGPH faces liquidity crunch appeared first on Daily Tribune......»»
SEC eases float disclosure rules
Regulator Securities and Exchange Commission, or SEC, has issued guidelines streamlining the requirements for companies seeking to raise funds in the capital market. The Commission on 12 and 21 September issued SEC Memorandum Circular 13 and 14, Series of 2023 to amend Annex C of Rule 12 of the 2015 Implementing Rules and Regulations of Republic Act 8799, or the Securities Regulation Code. Annex C of SRC Rule 12 details the non-financial information that must be disclosed in the registration statements filed with the SEC by corporations issuing securities such as shares of stock, corporate bonds, and commercial papers in order to raise capital. Part III, Paragraph A, Subparagraph 2(a) of Annex C directs a registrant to discuss its “financial condition, changes in financial condition, and results of operation for each of the last three fiscal years” under the Management’s Discussion and Analysis section of its prospectus. MC 13 clarifies that registrants are required to disclose financial information for only two comparative periods for the last three fiscal years. For instance, financial statements for the year ended 31 December 2022 must contain line items showing comparative balances only for 31 December 2022 and 31 December 2021. In addition, the financial statements must contain line items for the comparative balances only for the fiscal years ended 31 December 2021 and 31 December 2020. Risk factors required MC 14 relaxes the requirement for a registrant to provide mitigating factors in the Risk Factors section of its prospectus, making the disclosure optional. Part I of Annex C directs a registrant to provide a description of its business, including a discussion of major risks involved in the company and its subsidiaries. MC14 amends the provision by stating that “[t]he company may include disclosure of the procedures to identify, assess, and manage such risks.” Furthermore, Paragraph C, Part VI of Annex C has been amended such that “[t]he registrant may indicate measures to mitigate the risks” related to its business. Such risks include factors that make the offering speculative or risky such as the absence of operating history, lack of profit from recent operations, poor financial position, or lack of market for the registrant’s securities. “The streamlined procedures are part of the Commission’s efforts to encourage more companies to tap the capital markets for their business expansion needs,” SEC chairperson Emilio Aquino said. The post SEC eases float disclosure rules appeared first on Daily Tribune......»»
FLI debt papers get top PhilRatings grade
The proposed P10-billion bond float of property developer Filinvest Land Inc., or FLI, has been assigned the highest credit ratings and stable outlooks by the Philippine Rating Services Corporation, or PhilRatings. FLI’s proposed bonds, amounting to P10 billion with a P2-billion oversubscription allowance, were assigned an issue credit rating of PRS Aaa. The high rating was also assigned to FLI’s outstanding bonds, totaling P35.4 billion. Proceeds from the issuance will be used for capital expenditures and debt refinancing. “We are delighted to receive a PRS Aaa rating from PhilRatings for our proposed bond issuance. This rating reflects our healthy fundamentals and underscores our constant focus on growth and financial sustainability,” Tristan Las Marias, FLI president and chief executive officer, said. PRS Aaa signifies the highest credit quality with minimal risk. The capacity to meet financial commitment is extremely strong under the grade. Outlook stable PhilRatings also issued a stable outlook on PhilRatings. An outlook gives a glimpse on the direction of any rating change within one year. A Stable outlook means the rating will likely be unchanged in the next 12 months. PhilRatings said it took “into account the following key considerations: FLI’s established brand name and track record, with geographically diverse real estate products and substantial land bank for future expansion; its sound growth strategies; its improved revenues and operating cash flow, supported by more than satisfactory liquidity and interest coverage” for the outlook. For 2023, FLI will launch condominium and housing developments in Antipolo City, Taytay, Angono, Calamba City, Tanauan City, Trece Martires City, Bacoor City, Dumaguete City, and the Island Garden City of Samal. FLI will also accelerate the development of its township projects in East Town in Cainta, Rizal; Timberland Heights in San Mateo, Rizal; Ciudad de Calamba in Calamba City, Laguna, The Wood Estates in Trece Martires City, Cavite, and Palm Estates in Bacolod City, Negros Occidental. The FLI townships will include residential, commercial, transportation, and school components to create a self-sufficient environment that considers the needs of residents and customers in mind. For malls, FLI is currently constructing Marina Town in Dumaguete City which will open by end-2023, and new malls in Filinvest Mimosa+ Leisure City and Activa Cubao which will open by end-2024. These will expand FLI’s retail portfolio by about 55,000 square meters in gross leasable area, or GLA, bringing FLI’s nationwide retail GLA to 300,000 square meters. The post FLI debt papers get top PhilRatings grade appeared first on Daily Tribune......»»
Filinvest Land bonds earn top credit score, stable outlook from PhilRatings
The proposed bond issuance of full-range developer Filinvest Land Inc. (FLI) has been assigned the highest issue credit ratings and stable outlooks by the Philippine Rating Services Corporation (PhilRatings). FLI’s proposed bonds, amounting to P10 billion with a P2 billion oversubscription option, were assigned an issue credit rating of PRS Aaa. The same PRS Aaa rating was also assigned to FLI’s outstanding bonds, totaling P35.4 billion. Proceeds from these bonds will be used for capital expenditures and debt refinancing. "We are delighted to receive a PRS Aaa rating from PhilRatings for our proposed bond issuance. This rating reflects our healthy fundamentals and underscores our constant focus on growth and financial sustainability. We are grateful for PhilRatings’ trust and confidence in Filinvest Land and aim to continue building the Filipino dream through our various property developments,” said Tristan Las Marias, FLI president and chief executive officer. Obligations rated PRS Aaa (the highest rating assigned by PhilRatings) are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment to the obligation is extremely strong. Each of the ratings was also assigned an Outlook of Stable. An Outlook is an indication as to the possible direction of any rating change within a one-year period and serves as a further refinement to the assigned credit rating for the guidance of investors, regulators, and the general public. A "stable outlook" means the rating will likely be unchanged in the next 12 months. According to PhilRatings, the assigned credit ratings "take into account the following key considerations: (1) FLI’s established brand name and track record, with geographically diverse real estate products and substantial land bank for future expansion; (2) its sound growth strategies; (3) its improved revenues and operating cash flow, supported by more than satisfactory liquidity and interest coverage,” among other factors. For 2023, FLI will launch condominium and housing developments in Antipolo City, Taytay, Angono, Calamba City, Tanauan City, Trece Martires City, Bacoor City, Dumaguete City, and the Island Garden City of Samal. FLI will also accelerate the development of its township projects in East Town in Cainta, Rizal; Timberland Heights in San Mateo, Rizal; Ciudad de Calamba in Calamba City, Laguna, The Wood Estates in Trece Martires City, Cavite, and Palm Estates in Bacolod City, Negros Occidental. These FLI townships will include residential, commercial, transportation, and school components to create a self-sufficient environment that considers the needs of residents and customers in mind. For malls, FLI is currently constructing Marina Town in Dumaguete City which will open by end-2023, and new malls in Filinvest Mimosa+ Leisure City and Activa Cubao which will open by end-2024. These will expand FLI’s retail portfolio by about 55,000 square meters in gross leasable area (GLA), bringing FLI’s nationwide retail GLA to 300,000 square meters. FLI is also present in the industrial park and ready-built factory leasing businesses with its Filinvest Innovation Parks in New Clark City, Tarlac, and Calamba City, Laguna. Last 19 August, FLI broke ground on the 25-hectare Filinvest Innovation Park Ciudad de Calamba, an expansion of the 50-hectare Filinvest Technology Park in Ciudad de Calamba. FIP-CDC is envisioned to become a stage for new and relevant products that will catalyze progress in the local community. The post Filinvest Land bonds earn top credit score, stable outlook from PhilRatings appeared first on Daily Tribune......»»
Strong local banks buttress economy
The strong banking system is considered a source of strength for the economy, Bangko Sentral ng Pilipinas Deputy Governor Francisco Dakila Jr. declared during the Philippine Economic Briefing on 12 September 2023 in Dubai. The economic team visited the Middle Eastern country to discuss investment prospects in the Philippines, updates on the economy, the government’s spending priorities, fiscal and infrastructure programs, and recent reforms that further opened the economy to foreign investors. Around 80 senior executives representing investment funds, corporations, business associations and the media participated in the roadshow. Dakila said banks are well-capitalized with a capital adequacy ratio, or CAR, of 16.4 percent on a consolidated basis as of the end of last March, above the minimum thresholds set by the BSP and the Bank for International Settlements. Efficient funds conduit The Philippine banking system’s assets, deposits and profits also grew year-on-year by nine percent, eight percent, and 26.1 percent, respectively, in June this year. “Indeed, the country’s banking system continues to be an efficient and responsible intermediator of funds,” he added. BSP Assistant Governor Arifa Ala also highlighted the government’s efforts to promote Islamic finance, including the issuance of its first sovereign Sukuk or Shari’ah-compliant bonds, which can expand the Philippines’ engagement with Islamic financial markets. Sukuk are certificates that represent shares in the ownership of assets, services, projects, or investment activities. These are issued under Shari’ah principles. Speakers of the PEB in Dubai included Ambassador to the United Arab Emirates Alfonso Ferdinand Ver, Department of Finance Secretary Benjamin Diokno, Budget Secretary Amenah Pangandaman, National Economic and Development Authority Secretary Arsenio Balisacan, Standard Chartered regional head of global subsidiaries Shada Elborno, and MUFG Global Corporate and Investment Banking MENA chief executive officer Elyas Al Gaseer. The post Strong local banks buttress economy appeared first on Daily Tribune......»»
UAE agri, energy, banking deals eyed
The Department of Finance, or DoF, on Wednesday said United Arab Emirates or UAE-based firms are keen on exploring investments in a range of industries in the Philippines, including food, water management, renewable energy, and Islamic banking. DoF said the economic team talked to executives of Brevan Howard, a technology-driven investment management platform; Arqaam Capital, a financial firm for emerging markets; and Investment Corporation of Dubai, the Dubai Government’s principal investment arm for the possible foreign investments. “The companies expressed interest in the Philippines’ renewable energy projects, port operations, water and wastewater management, waste-to-energy projects, upcoming Sukuk bond issuances, Islamic banking, and the Maharlika Investment Fund,” DoF said in a statement to the media. Middle East roadshow Investment and trade discussions surfaced during the Philippine economic team’s investor briefing in the UAE, a seven-state federation, from 11 to 12 September. The finance department said the possible foreign investments affirm the need for the Comprehensive Economic Partnership Agreement or CEPA with the UAE aimed at easing and expanding trade between the two countries. DoF said the UAE Government and the Philippines have already signed an agreement for investment protection and collaboration as part of the ongoing negotiations over CEPA. It added the UAE will soon submit to the Philippines its template for the final document on CEPA. President Ferdinand Marcos Jr. said he aims to adopt foreign water technologies, such as hydroelectric power plants, irrigation canals, and diversion dams to store and distribute more water for households, commercial establishments, and farm irrigation amid the threats of climate change. Food exports to Dubai usually include pineapples, bananas, and fresh and processed fish amounting to over $30 million. For renewable energy, the Department of Energy aims to generate power capacity of at least 20,000 megawatts through a mix of sources, such as the sun, wind and geothermal. Meanwhile, National Treasurer Rosalia de Leon said the Philippines is entering the Islamic debt market by issuing Sukuk bonds, or Islamic bonds, in the fourth quarter this year or early next year to raise $1 billion. “Sukuk bonds will diversify the Philippines’ sources of financing, widen its investor base to reach the untapped Islamic finance market, and boost investments in physical and digital connectivity,” she said. The Islamic bonds offer investors a share of profits from projects financed by the debt instrument instead of interest payments from traditional bonds. The government aims to raise $5 billion from commercial borrowing and already acquired $3 billion in January. The post UAE agri, energy, banking deals eyed appeared first on Daily Tribune......»»
Politically divided Chile marks 50-year coup anniversary
Chile on Monday marked 50 years since the coup d'etat that brought Augusto Pinochet to power, with political divisions over the legacy of his brutal dictatorship on stark display. Commemorations of the violent US-backed ouster of Marxist leader Salvador Allende still evoke strong emotions, and police fired teargas and water cannons at protesters who vandalized the presidential palace on the anniversary's eve. Leftist President Gabriel Boric led an event at the palace, known as La Moneda, to mark the historic date, and stressed the need to condemn those who violate human rights "without any nuance." "The coup cannot be separated from what came after," he said, referring to the 17-year Pinochet dictatorship under which more than 3,200 people were killed or "disappeared" and tens of thousands tortured. The far-right UDI party issued a statement Monday defending the coup as "inevitable" due to the failures of Allende's political left. The presidents of Mexico, Colombia, Bolivia, and Uruguay were at the emotional ceremony in Santiago, also attended by Rage Against the Machine guitarist Tom Morello and former Uruguayan president Jose Mujica. No right-wing representatives attended Monday's event at La Moneda. Poetry readings and musical performances were interrupted by a minute of silence to mark the moment the bombs started dropping on the palace. Allende committed suicide while troops and tanks closed in. As night fell, thousands arrived at the national stadium in the capital -- once used by Pinochet's regime as a torture center -- to place candles in memory of the victims. Elsewhere, protesters on the outskirts of town prevented the passage of vehicles. The 1973 coup, in a country seen until then as a bastion of democracy and stability in Latin America, reverberated around the world and underscored covert interference by the United States. US State Department spokesperson Matthew Miller said Monday that President Joe Biden's government "has tried to be transparent about the US role in that chapter of Chilean history by recently declassifying documents from 1973 as the Chilean government has requested us to do." 'Never again' Chileans remain deeply divided between those who defend the coup and those who repudiate it, while many feel the anniversary is irrelevant amid economic woes and concerns over rising crime. A survey conducted by Cerc-Mori in May found that 36 percent of people believe Pinochet "liberated Chile from Marxism" -- the highest figure measured in 28 years of polling. On Sunday, Boric became the first president since the end of the dictatorship in 1990 to attend a commemorative march through Santiago for Pinochet's victims. But the procession was marred by vandals causing damage to the exterior of La Moneda and the general cemetery that houses a victims' memorial. Six police officers were injured and at least 11 people were arrested, officials said. Boric blamed the acts on "adversaries of democracy." On Sunday night, some 6,000 women dressed in black held a peaceful vigil in the capital under the slogan: "Never again will democracy be bombed," in reference to the 1973 air raids. Politics 'a little toxic' Led by Boric, Allende's leftist political heirs are in power in Chile today. But the far-right Republican Party -- Pinochet apologists -- emerged the strongest from elections in May for a body tasked with drafting a new constitution to replace the one that dates from the dictatorship era. Pinochet died of a heart attack on 10 December 2006, aged 91, without ever stepping foot in a court. Michelle Bachelet, a former leftist president of Chile, told a local radio station Monday the country must "learn from the lessons of the past" at a time when politics "is a little toxic." She herself was tortured during the dictatorship, as was her father, an air force general who had opposed the coup. Chile's right-wing opposition has abstained from signing a document affirming a commitment to "defend democracy from authoritarian threats" that has been signed by four living ex-presidents of the South American country. On Sunday, UN Secretary-General Antonio Guterres said the 1973 coup "was an institutional breakdown that ruptured the bonds of coexistence and marked generations of Chileans, but also inspired many to fight for justice and freedom." He added: "Today's strong Chilean democracy gives us hope that humanity, united in its diversity, can solve any global challenge." The post Politically divided Chile marks 50-year coup anniversary appeared first on Daily Tribune......»»
Inflation, slowdown burden global outlook
The capital markets remained volatile in August as investors weighed the risks of rising inflation and slower economic growth against the prospect of further monetary tightening by the US Federal Reserve, First Metro Investment Corp., and the University of Asia and Pacific Capital Markets Research said on Wednesday. In FMIC and UA&P’s August 2023 issue of The Market Call, economists said that the Philippine economy grew by 4.3 percent year-on-year in the second quarter of 2023, slower than the 5.7 percent growth in the first quarter. “Despite the slowdown in GDP expansion to 4.3 percent year-on-year in (the second quarter), other key economic data do not preclude a full-year growth of 6 to 7 percent,” economists said. Momentum seen to be sustained They also mentioned that sustained job growth, especially in the sectors of manufacturing, construction (for the industry), accommodation and food services, and other parts of the service sector, and a slight uptick in exports, with an added boost from the peso depreciation in August, “provide some glow” for the economy. The economists also noted that other key economic data remained positive, with inflation easing to 4.7 percent in June, a 15-month low. “Apart from inflation slowing to 4.7 percent, a 15-month low, (the National Government) will likely ramp up spending in (the second half of 2023), especially in infrastructures, which will also benefit from ongoing major PPP projects (classified as private construction),” they said. With local inflation easing to 4.7 percent in June, FMIC and UA&P said the investors flocked the short-dated bonds in both auctions and the secondary market in July, pushing down yields in the front end of the curve. The economists said the domestic yields continue their ascent as US 10-year Treasuries climb further in August as the Fed hinted more rate hikes to come. “In our view, the Fed will likely pause in its September meeting as they will have to wait for more data that show clearer signs that inflation will fall within target,” economists said. The post Inflation, slowdown burden global outlook appeared first on Daily Tribune......»»
Phl markets volatile due to rising inflation, other factors
The Philippine capital markets continued to be volatile in August as investors weighed the risks of rising inflation and slower economic growth against the prospect of further monetary tightening by the U.S. Federal Reserve, First Metro Investment Corp. (FMIC), and the University of Asia and Pacific (UA&P) Capital Markets Research said on Wednesday. In FMIC and UA&P's August 2023 issue of The Market Call, economists said that the Philippine economy grew by 4.3 percent year-on-year in the second quarter of 2023, slower than the 5.7 percent growth in the first quarter. "Despite the slowdown in GDP expansion to 4.3 percent year-on-year in (the second quarter), other key economic data do not preclude a full-year growth of 6 to 7 percent," economists said. They also mentioned that sustained job growth, especially in Manufacturing, Construction (for the industry), Accommodation and Food Services, and other parts of the service sector, and a slight uptick in exports, with an added boost from the peso depreciation in August, "provide some glow" for the Philippine economy. The economists also noted that other key economic data remained positive, with inflation easing to 4.7 percent in June, a 15-month low. "Apart from inflation slowing to 4.7 percent, a 15-month low, (the National Government) will likely ramp up spending in (the second half of 2023), especially in infrastructures, which will also benefit from ongoing major PPP projects (classified as private construction)," they said. With local inflation easing to 4.7 percent in June, FMIC and UA&P said the investors flocked the short-dated bonds in both auctions and the secondary market in July, pushing down yields in the front end of the curve. The economists said the domestic yields continue their ascent as U.S. 10-year Treasuries climb further in August as the Fed hinted more rate hikes to come. "In our view, the Fed will likely pause in its September meeting as they will have to wait for more data that show clearer signs that inflation will fall within target," economists said. "Furthermore, we see that the yields of peso bonds and U.S. Treasuries will tend to decouple as local inflation falls within (the Bangko Sentral ng Pilipinas') target range of 2 percent to 4 percent by the fourth quarter," they added. Economists added that the real 10-year yields had turned positive by June and neared normal levels in July after an abnormal, prolonged 11-month run with negative readings. The post Phl markets volatile due to rising inflation, other factors appeared first on Daily Tribune......»»
BDO vows backing RE via financing
BDO Unibank, Inc., or BDO, expressed its support for the Department of Energy’s efforts to increase energy generation to address the rising demand for electricity while minimizing its environmental impact by promoting renewable sources of energy. During the recently-held Philippine Power Plant Energy Summit, BDO Capital & Investment Corporation president Eduardo Francisco said the bank is committed to working with the energy sector to make the transition to sustainable energy faster and easier. Since 2010, BDO has considered sustainable energy finance as a priority sector in financing, in support of national economic development and energy security. Sustainable initiatives enhanced The bank continues to expand its sustainable finance initiatives towards funding new and existing renewable energy projects to increase their capacity and contribute to the country’s avoidance of greenhouse gas emissions. Being among the pioneers of promoting renewable energy and energy efficiency financing in the country, BDO is looking for more renewable energy projects to finance. BDO encourages energy stakeholders to work together and consider the bank as a partner in equity raising, initial public offering and bonds. BDO also offers project financing and bank lending for the energy sector. Francisco, along with other speakers, recognized that there are hurdles that the industry needs to surpass to promote cheaper, safer, more sustainable energy in the country, which includes the addition of nuclear power in the energy mix. “We need the DoE and the Congress’ help. The banks are not allowed to look at nuclear energy today as it is not considered as renewable. Nuclear is sustainable, but investing in nuclear is going against our definition of sustainable lending today,” he said. Francisco believes that the consideration of nuclear as part of sustainable energy could help unlock capital for renewable energy projects. “We want to be ready so that when we need the large financing for these projects, the banks are very much ready to help.” The post BDO vows backing RE via financing appeared first on Daily Tribune......»»
MIF will be finalized by September—DOF
The drafting of the Maharlika Investment Fund (MIF) Act’s implementing rules and regulations (IRR) will be finalized by September 2023, the Department of Finance said on Tuesday. In a statement, DOF said the MIF’s IRR is still currently underway as the Maharlika Investment Corporation (MIC) is expected to be fully operational by next year. “The (MIC) will be created to serve as the investment body responsible for the overall governance and management of the Fund and is expected to be fully operational by end-2024,” DOF said. For context, President Ferdinand Marcos Jr on early Tuesday signed R.A. No. 11954 or the MIF Act of 2023, a landmark measure that will establish the country's first sovereign investment fund. According to DOF, the Fund is designed to catalyze economic development and accelerate the country’s growth by optimizing the use of government financial assets and promoting their intergenerational management. “The Fund is an additional vehicle that would allow the government to tap surpluses that cannot be utilized under current legal frameworks. It will also be open to co-financing with foreign investors and multilateral institutions to facilitate the financing of capital-intensive big-ticket infrastructure,” Finance Secretary Benjamin Diokno said. Meanwhile, other economic managers said the MIF will comprise separate funds for investing in profitable infrastructure over the long term and investing in capital market assets like fixed-income securities and stocks over the short to medium term. In a separate statement, the Department of Budget and Management said the MIF will enhance fiscal stability by engaging in strategic and profitable investments. These investments will include activities such as investing in foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, joint ventures, mergers and acquisitions, real estate, and high-impact infrastructure projects, among various other opportunities. The National Economic and Development Authority (NEDA), for its part, said the enactment of MIF into law will help achieve the long-term development goals of the Philippines. “The Economic Team has always emphasized the importance of enhancing the platforms that we have for engaging with the private sector and promoting investments in strategic areas. The MIF will help us achieve this objective,” NEDA Secretary Arsenio Balisacan said. “We fully support this as it will help expand our fiscal space. So we at the DBM remain committed to helping ensure that this Development Fund will be a success and implemented with utmost integrity," Budget Secretary Amenah Pangandaman also said. The post MIF will be finalized by September—DOF appeared first on Daily Tribune......»»
Highly-leveraged SMGP
San Miguel Corp. predictably won the Court of Appeals decision recently, reversing the Energy Regulatory Commission in its rejection of the petition of its energy arm San Miguel Global Power Corp. or SMGP’s plea for a temporary rate increase. SMGP claims P15 billion in losses from its units South Premiere Power Corp. and San Miguel Energy Corp. as a result of high fuel costs and the supply restrictions from the Malampaya natural gas project. It turns out that SMGP direly needs to be profitable since it is deep in borrowings for its projects. Data supplied to Daily Tribune by the think tank Center for Energy, Ecology and Development showed SMGP has obtained several financing arrangements, such as long-term debts and issuance of Senior Perpetual Capital Securities or SPCS and other debt instruments to facilitate the acquisition of coal-fired power plants and investments in new power plants. For the construction and expansion of coal plants, SMGP has secured the following financial transactions: January 2018, drawing P2 billion from the P44-billion Omnibus Loan and Security Agreement to finance the construction of two 150-megawatt Limay coal-fired power plants; March 2018, $700-million floating interest term loan, $400-million short-term bridge financing loans, $400-million floating interest term loan, and $650-million Redeemable Perpetual Securities for the acquisition of Masinloc Group including two 315 MW Masinloc power plant and the construction of Unit 3 and 10 MW battery energy storage project; January 2019, $35 million from its $525 million Omnibus Expansion Facility Agreement to finance the ongoing construction of the 300 MW expansion of Masinloc Power Plant; November 2019, drawing of an additional $40 million from $525 million OEFA to finance the additional 300 MW Masinloc Power Plant; July 2019, drawing of P978 million from a P2.1 billion 12-year Omnibus Loan and Security Agreement with a syndicate of local banks for the financing of the construction of the Davao Greenfield Power Plant; March 2020, drawing of an additional $43 million to finance the construction of an added 335 MW Unit-3 Masinloc Power Plant; and July 2022, allocation of up to P20 billion from the sale of P30 billion fixed rate bond with an oversubscription option of up to P10 billion. As for its liquefied natural gas-related projects, SMGP has issued debt certificates in the past three years including: October 2020 — $400 million worth of SPCS issued for 100 percent with an initial rate of 7 percent per annum. In-principle approval for the listing and quotation from Singapore Exchange Trading Ltd. December 2020 — $350 million worth of SPCS issued for 102.457 percent with an initial rate of 7 percent, and listed on the SETL; April 2021 — availment of $50 million from the October 2020 loan facility agreement for capital expenditures related to the Ilijan gas-fired power plant and its expansion, financing of LNG importation, and storage facilities, among others; June 2021 — $600 million worth of SPCS issued for 100 percent with an initial rate of 5.45 percent per annum, and listed on the SETL; September 2021 — $150 million worth of SPCS issued for 100.125 percent with an initial rate of 5.45 percent per annum, and listed on the SETL; and July 2022 — allocation of up to P24.5 billion from the sale of P30 billion fixed rate bonds with an oversubscription option of up to P10 billion. In April 2021, SMGP also availed of its $50 million from its term loan facility with a foreign bank executed in October 2020. The proceeds of this loan are intended for the payment of capital expenditures of the Ilijan plant, funding of liquefied natural gas import, storage, and distribution facilities, pre-operating and operating working capital requirements for Battery Energy Storage System projects, and transaction-related fees, costs, and expenses of the facility. The post Highly-leveraged SMGP appeared first on Daily Tribune......»»
What experts want to hear during Marcos’ SONA this month
Economists said they are most interested to hear the plans of President Ferdinand Marcos Jr. on managing inflation, creating more jobs and his assessment of the proposed Maharlika Fund at his second State of the Nation Address on 24 July. “I’m looking forward to his plans on inflation and competitiveness. Inflation is a day-to-day concern of the ordinary Pinoy. You and I feel it,” Economics Prof. Ser Peña-Reyes of the Ateneo de Manila University’s Department told The Daily Tribune. The government aims to curb the rise in prices of goods and services within the inflation range of 2 percent to 4 percent this year. Last month, inflation figured at 5.4 percent, the lowest since June last year. In general, food as a basic need was cheaper as its inflation rate decreased to 6.7 percent in June from 7.4 percent in May. However, prices of certain food items, namely rice, fish and vegetables were up. Being also the agricultural chief, Peña-Reyes said Marcos must inform related industries and consumers of his strategies for boosting agricultural supplies and ensuring their efficient delivery to the markets. He said this should help meet the consumer demand which prevents price hikes. “Farmers and fishermen need to be organized to achieve economies of scale, and also be given access to credit, inputs, technology, and markets to make them competitive.” He added, “We really need to have a coordinated effort, similar to what our ASEAN neighbors are doing, where the entire value chain, from farm to fork, is covered.” Prof. Ramon Clarete of the University of the Philippines (UP) said he is keen on hearing from the president, the progress on clustering of farm lots nationwide as a way to increase agricultural production. “The president should end policies in the Comprehensive Agrarian Reform Law of 1988 or CARP and aggressively express support for cluster farming by small farmers.” This is echoed by Philippine Chamber of Commerce and Industry President George Barcelon, who said the government must consolidate small-scale farmers to achieve the economies of scale or increasing harvests at the lowest cost of production possible, through the use of machines and delivery of group assistance, such as loans and skills training, to farmers cooperatives and associations. “Three hectares of farmland allowed by CARP is small land for families of farmers, unlike in other countries. As we invest in machinery, research and development, the government must also allow bigger land for farmers to encourage productivity.” Barcelon added Marcos should also elaborate on his plan on “rightsizing to lessen bureaucracy and corruption.” Rightsizing ensures government agencies perform more efficiently and achieve certain objectives by implementing one or a combination of measures such as reducing the workforce, reorganizing the management team, or hiring new employees. However, he stressed rightsizing should not be confused with reducing government expenses as “it is more about gaining the most benefits for the government and the public in the soundest way.” According to the World Competitiveness Yearbook by the Switzerland-based Institute of Management Development, the Philippines ranked the lowest in government efficiency among 64 countries at 52nd this year from 48th last year. “Competitiveness is very important because it affects our attractiveness as an investment destination for foreign firms to expand their operations here, which would also affect our labor productivity,” Ateneo Prof. Peña-Reyes said. Aside from these, UP Prof. Clarete said he is awaiting statements from the president, which would indicate his support or disapproval of the proposed Maharlika Fund. Proponents of this fund said it will help increase the financial resources of the government and build more infrastructure projects through proceeds from a mix of investment channels such as stocks and bonds. Capital fund sources will come from the Bangko Sentral ng Pilipinas (BSP), Land Bank of the Philippines, and the Development Bank of the Philippines. “In my view, the country is taking a big risk. Poor governance is a problem and remains to be so,” Clarete warned. “It may not happen in this administration but future administrations with nothing to prove as they only inherit the management of it may create innovative ways of stealing from the fund masked as failed investments.” The post What experts want to hear during Marcos’ SONA this month appeared first on Daily Tribune......»»
What experts want to hear during Marcos’s SONA this month
Economists said they are most interested to hear the plans of President Ferdinand Marcos Jr. on managing inflation, creating more jobs and his assessment of the proposed Maharlika Fund at his second State of the Nation Address on 24 July. “I’m looking forward to his plans on inflation and competitiveness. Inflation is a day-to-day concern of the ordinary Pinoy. You and I feel it,” Economics Prof. Ser Peña-Reyes of the Ateneo de Manila University’s Department told The Daily Tribune. The government aims to curb the rise in prices of goods and services within the inflation range of 2 percent to 4 percent this year. Last month, inflation figured at 5.4 percent, the lowest since June last year. In general, food as a basic need was cheaper as its inflation rate decreased to 6.7 percent in June from 7.4 percent in May. However, prices of certain food items, namely rice, fish and vegetables were up. Being also the agricultural chief, Peña-Reyes said Marcos must inform related industries and consumers of his strategies for boosting agricultural supplies and ensuring their efficient delivery to the markets. He said this should help meet the consumer demand which prevents price hikes. “Farmers and fishermen need to be organized to achieve economies of scale, and also be given access to credit, inputs, technology, and markets to make them competitive.” He added, “We really need to have a coordinated effort, similar to what our ASEAN neighbors are doing, where the entire value chain, from farm to fork, is covered.” Prof. Ramon Clarete of the University of the Philippines (UP) said he is keen on hearing from the president, the progress on clustering of farm lots nationwide as a way to increase agricultural production. “The president should end policies in the Comprehensive Agrarian Reform Law of 1988 or CARP and aggressively express support for cluster farming by small farmers.” This is echoed by Philippine Chamber of Commerce and Industry President George Barcelon, who said the government must consolidate small-scale farmers to achieve the economies of scale or increasing harvests at the lowest cost of production possible, through the use of machines and delivery of group assistance, such as loans and skills training, to farmers cooperatives and associations. “Three hectares of farmland allowed by CARP is small land for families of farmers, unlike in other countries. As we invest in machinery, research and development, the government must also allow bigger land for farmers to encourage productivity.” Barcelon added Marcos should also elaborate on his plan on “rightsizing to lessen bureaucracy and corruption.” Rightsizing ensures government agencies perform more efficiently and achieve certain objectives by implementing one or a combination of measures such as reducing the workforce, reorganizing the management team, or hiring new employees. However, he stressed rightsizing should not be confused with reducing government expenses as “it is more about gaining the most benefits for the government and the public in the soundest way.” According to the World Competitiveness Yearbook by the Switzerland-based Institute of Management Development, the Philippines ranked the lowest in government efficiency among 64 countries at 52nd this year from 48th last year. “Competitiveness is very important because it affects our attractiveness as an investment destination for foreign firms to expand their operations here, which would also affect our labor productivity,” Ateneo Prof. Peña-Reyes said. Aside from these, UP Prof. Clarete said he is awaiting statements from the president, which would indicate his support or disapproval of the proposed Maharlika Fund. Proponents of this fund said it will help increase the financial resources of the government and build more infrastructure projects through proceeds from a mix of investment channels such as stocks and bonds. Capital fund sources will come from the Bangko Sentral ng Pilipinas (BSP), Land Bank of the Philippines, and the Development Bank of the Philippines. “In my view, the country is taking a big risk. Poor governance is a problem and remains to be so,” Clarete warned. “It may not happen in this administration but future administrations with nothing to prove as they only inherit the management of it may create innovative ways of stealing from the fund masked as failed investments.” The post What experts want to hear during Marcos’s SONA this month appeared first on Daily Tribune......»»
New door opens
The Maharlika Investment Fund bill after months of deliberation is as good as signed. The next step would be the crafting of the implementing rules and regulations or IRR where the nitty-gritty of the law will be addressed. The IRR will be prepared by economic managers. President Ferdinand “Bongbong” Marcos Jr. will then pick the people who will comprise the Maharlika Investment Corp. or MIC that the law mandates will manage the fund. The MIC will manage the sovereign wealth fund that will invest in a wide range of assets, including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, commercial real estate, and infrastructure, based on the provisions of the law. The battleground for the MIF thus returns to the Executive branch as detractors now have the economic managers in their crosshairs as the IRR is being drafted. One of the prime movers of the MIF, Albay Rep. Joey Salceda, said the IRR will flesh out the specifics of the crucial fund build-up and the forming of the MIC, such as the company’s regulation by the Civil Service Commission, the listing of the MIF in the stock market, and allowing multilateral financing institutions like the World Bank and Asian Development Bank to be strategic partners of the MIF. “I congratulate House Speaker Ferdinand Martin Romualdez, Chairman Irwin Tieng, and our Senate counterparts. I will continue to offer what I can by way of prior experience and subject matter expertise in the drafting of the IRR,” Salceda said. Congress ratified the bill before adjourning its session last 31 May but the final copy had to be refined following intrigues hurled by unrelenting critics who deemed it unconstitutional primarily due to the differing prescriptive periods for filing charges related to irregularities. The discrepancies proved to be clerical errors and not a reason to veto the bill as the inconsolable minority had demanded. The MIF comes at a propitious period after the economy grew by 7.6 percent and 7.2 percent in the third and fourth quarters, respectively, and 6.4 percent in the first quarter of this year — numbers that show the country has among the fastest development clips in the world. Finance Secretary Benjamin Diokno expects the MIF to be in full operation before the end of the year. The P125-billion seed fund will be drawn from the Land Bank of the Philippines, the Development Bank of the Philippines, and the national government. The national government’s contribution will come from Bangko Sentral ng Pilipinas dividends, its share in the income of the Philippine Amusement and Gaming Corp., privatization proceeds, and royalties and special assessments. Being looked into is channeling Malampaya natural gas earnings to bolster the fund. The MIF will initially have at its disposal P75 billion by the end of the year, which will come from Landbank and DBP and may forthwith be invested in several ventures or the capital markets. Fund managers estimate a return of over 10 percent just for the initial P75-billion investment. Economic managers envision the MIF as creating a new source of financing for the government which now mainly relies on tax revenues and borrowings to plug the fiscal gap. The MIF will free up the government’s fiscal space as the burden of borrowing is reduced with the sovereign wealth fund augmenting the government’s resources. Another MIF function will be to accelerate investments in development projects such as infrastructure through tie-ups with capitalists and other sovereign funds. The perennial budget deficits, which are the culprit in the debt pile-up, may soon be a thing of the past when the MIF goes full throttle. The post New door opens appeared first on Daily Tribune......»»
Sun Life readies online investing tool
Sun Life Philippines will launch an online financial literacy and investing platform in August to help Filipinos build their wealth through accessible means. Carla Gonzalez-Chong, head of client experience and marketing, on Saturday told the Daily Tribune the platform called Easy as ABC will be available for clients starting on 15 August to provide them webinars on investing in mutual funds consisting of local and foreign stocks and bonds. “Its main objective is to let Filipinos know that investing is very easy, that is why we called it ABC. Aside from attending webinars, they can also buy products through the website where they can just type Sun Life Prosperity Funds and choose from the options,” Chong said. She shared the company offers 16 mutual fund options catering to a range of clients, from those with super conservative investment risk appetites to the very aggressive. Financial responsibility at early age Clients can start investing with a capital as low as P100. For those below 18 years old, a proof of consent from their parents must be presented. “There are very young clients who want to try out investing first. There are some who are looking to diversify their portfolio because we have funds invested offshore, giving them access to the world equity index, while others need something to build their emergency funds.” Chong said around 20 percent of the company clients are consuming its investment products, while 80 percent are supported by its insurance products. However, she stressed these figures are not black-and-white as some clients preferred a mix of products from the two business areas. Chona said purchasing investing products through the new online platform will be as easy as shopping online with its bank transfer and e-wallet payment options. Sun Life Philippines on Saturday also introduced pop singer and actress Sarah Geronimo as new ambassador, joining his husband Matteo Guidicelli, actor, and host, in the Sun Life family. Through their online stories, Chong said the celebrity couple will be guiding fellow married clients on organizing their finances as they start building a family. “They are our first husband-and-wife ambassadors. Their insights would be really about money values because you’re bringing two people together who were raised with different money values and money behaviors. Having Sarah and Matteo together, we can show them that journey towards uniting their vision for their family.” The post Sun Life readies online investing tool appeared first on Daily Tribune......»»
Economy to grow by almost 6 percent
The Philippine economy is expected to grow slightly below 6 percent in the second quarter of 2023, First Metro Investment Corp. and the University of Asia and the Pacific Capital Markets Research said on Friday. In an emailed commentary, FMIC and UA&P said the economy will be supported by the decline in headline inflation to 6.1 percent by May, the rebound in government spending, and the P70.0-B income tax cut. However, they said the global economic slowdown is expected to weigh on exports, which could lead to a slightly weaker peso. "The peso will likely remain slightly weak, but the plunge in imports due to the slump in crude oil and other commodity prices should result in a less negative trade deficit for (the second quarter) GDP growth which we think will slightly trail 6 percent," the economists said. On the fixed income front, the economists said they expect yields to fall by 25 bps by mid-H2 as inflation loses further steam and breaks through 4 percent by the fourth quarter. "With BSP's pause in its rate hiking cycle, taking the cue from the Fed's taking a break after 13 consecutive rate increases, and BSP's lowering of reserve requirements by as much as 250 bps for universal/commercial banks would provide more liquidity to banks and likely pull down long bonds initially," FMIC and UA&P wrote. On the equities front, the economists said the PSEi posted a -2.2% MoM loss to end May at 6,477.36. They noted that Dow Jones Industrial Average and Financial Times Stock Exchange Group 100 also slumped by -3.5 percent and -8.3 percent, respectively, in May, which could have affected the negative performance of the PSEi in the same month. "Only the Holdings sector turned in a positive performance as it posted a +1.3% MoM gain in May. Meanwhile, five sectors landed in negative territory. The Financial sector ranked last in the sectoral race with its -5.5% loss in May," FMIC and UA&P said. However, the economists said they expect the PSEi to breach 6,700 even with their moderately fast projection of GDP expansion. "Nonetheless, the upcoming release of Q2 GDP data should bear heavy importance on PSEi's direction in the following months. Still, we expect PSEi to breach 6,700 even with our moderately fast projection of GDP expansion," the economists said. The post Economy to grow by almost 6 percent appeared first on Daily Tribune......»»
ADB raises $4 billion from global bonds
The Asian Development Bank raised $4 billion from the issuance of two-year and 10-year global bonds, with proceeds to form part of its ordinary capital resources to support developing member countries......»»
ALI secures SEC okay for P50-B bonds float
Ayala Land Inc. or ALI, the property arm of the Ayala Group, has secured the approval of the Securities and Exchange Commission for its P50-billion shelf registration bonds. In a statement on Thursday, the SEC said its approval of ALI’s offering covers bonds that may be issued in one or more tranches within three years. The Commission also noted that despite getting the regulator’s clearance, ALI still needs to comply with the remaining requirements. First tranche For the first tranche, Ayala Land will offer up to P12.25 billion of five-year and 10-year bonds, plus an oversubscription option of up to P5 billion. Additionally, the company will offer up to P4.75 billion of bonds comprising the fourth and final tranche of its existing P50-billion debt securities program, approved by the Commission in 2021. In case the oversubscription option is fully exercised, ALI could net up to P21.73 billion from the offering, which will be used to refinance short-term loans and fund capital expenditures. Bonds offered at face value Based on the company’s latest timetable, the bonds will be offered to the public at face value from 14 to 20 June, in time for listing on the Philippine Dealing and Exchange Trust Inc. on 27 June. Ayala Land engaged BDO Capital & Investment Corporation, BPI Capital Corporation, China Bank Capital Corporation, East West Banking Corporation, First Metro Investment Corporation, RCBC Capital Corporation and SB Capital Corporation as joint lead underwriters and book-runners for the offer. The post ALI secures SEC okay for P50-B bonds float appeared first on Daily Tribune......»»
Maharlika fund to be operational by year end
The Maharlika Investment Fund (MIF), the country’s sovereign wealth fund, is expected to be fully operational by the end of 2023, Finance Secretary Benjamin Diokno recently said. The Finance Secretary said this during his weekly talk to the reporters after Congress approved the bill creating the Maharlika Investment Fund last week. Diokno added that it will now be sent to Malacañang for President Ferdinand R. Marcos Jr. to approve before the President’s second State of the Nation Address in July. “We’re expected to prepare the implementing rules and regulations (for the Maharlika fund law); we’re expected to look for people to man the Maharlika Investment Corp. I expect (the fund) to be fully operational before the end of the year,” Diokno said. Diokno also noted that pension funds may invest in projects, as long as they do not infuse equity. To recall, the Senate made a provision in its bill that prohibits government pension and insurance funds, specifically the Government Service Insurance System, Social Security System, and Philippine Health Insurance Corp. from providing initial funding for the fund. “If there is a big project and the GSIS or SSS wants to subscribe for or invest in because of the high returns, they can do it. This is for projects, but not equity,” Diokno said. Meanwhile, National Treasurer Rosalia de Leon said that Maharlika Investment Corp., which is tasked to manage the fund, will have initial capital of at least P75 billion by the end of the year. “The corporation has an authorized capital stock of P500 billion. That is the authorized stock, then the National Government together with LANDBANK and DBP will subscribe (for shares). That will raise P125 billion. But the initial paid-up capital will be coming from the two government financial institutions — P50 (billion) and P25 billion (for) the corporation,” De Leon said. “You have to distinguish between the corporation and the fund. The corporation is the one that will manage the fund,” the National Treasurer added. De Leon also said that the MIF can help reduce government borrowing. “Without Maharlika, how do we fund our projects? Before, it was through debt. This time around (it can be) equity so we can reduce government debt,” she added. For Diokno, the MIF aims to maximize national resources by generating profits to boost the economic objectives of the Marcos administration. He mentioned that the fund will be allocated across various assets, such as foreign currencies, fixed-income securities, both domestic and international corporate bonds, joint ventures, mergers and acquisitions, real estate, and significant infrastructure projects. The post Maharlika fund to be operational by year end appeared first on Daily Tribune......»»