Gov’t issuing P117B in T-bills, bonds in Q2 Higher by 9.3% than year-ago level By Ronnel Domingo Lined up for auction in the quarter ending June are P63 billion worth of treasury bills and P54 billion worth of treasury bonds. The increase in the offering comes in the wake of what the Singapore-based DBS Bank described as a lackluster performance of the Philippine domestic bond market in the previous quarters. In a notice to dealers of government securities, National Treasurer Roberto B. Tan said the BTr was scheduled to offer in seven fortnightly auctions a total of P10.5 billion in 91-day T-bills, P24.5 billion in 182-day bills and P28 billion in 364-day bills. Also in the second quarter, the BTr is set to offer a batch of four-year bonds, three batches of seven-year bonds and two of 10-year bonds, each worth P9 billion. Based on the domestic borrowing plan for the second quarter, the amount of debt paper that may be issued in the next three months will be higher by about 9.3 percent than year-ago level. In a new research note, DBS said the Philippine domestic bond market showed the only negative performance in Asia in the first quarter. The bank said in a new research that “with the exception of the Philippines, Asian local currency government bond markets provided investors with positive returns in” the first quarter of 2011. “After a sharp fall in Philippine government bond yields in (the third and fourth quarters of 2010), that is not really surprising,” DBS said. “Overall, the (first quarter of 2011) performance of Asian bond markets was somewhat better than we had expected, but that just means that the adjustment in yields to more sustainable interest rate levels is taking longer,” the bank added. The Bangko Sentral ng Pilipinas last week finally increased its policy rates by 25 basis points from 4 percent for overnight borrowing and 6 percent for overnight lending, which had remained unchanged since July 2009. “As the US economy is improving materially, we think higher yields in the US will come soon, and that keeps us cautious also in the Asian bond space,” DBS said. “The bond market outlook remains bearish in (the second quarter of 2011).”
The President announced the subsidy on the day militant transport workers staged a strike in various parts of the country, including Metro Manila, to protest soaring fuel prices. “What control do we have over (developments in) the Middle East? None. What can we do here? We will have a subsidy for all franchises of public transport,” he told reporters. Mr. Aquino said the subsidies would be in lieu of fare increases. The subsidy will not cover buses because the Land Transportation and Franchising Regulatory Board granted them a provisional P1-fare increase starting March 29. Smart cards The President said the government would distribute “smart cards” that would entitle holders of PUJ and tricycle franchises to the subsidy. “The subsidy will only be for those who have been granted a franchise. That will be our control so that our subsidy won’t be diverted to just about anywhere,” he said. He said the measure would be reviewed after one month. “We will add, remove or decrease the amount of subsidy depending on the price of crude oil on the world market,” Mr. Aquino said. Grateful The jeepney group United Organizations of Drivers and Operators Nationwide (locally called Pinagkaisang Samahan ng Tsuper at Opereytors Nationwide or Piston) said it was grateful for the subsidy but pointed out that it was a temporary solution to the drivers’ woes. “This is only good for 30 days and, although the discount is P3 per liter, the fuel subsidy would only be made available to PUJ and tricycle drivers,” said Piston secretary general George San Mateo. He said that should Mr. Aquino put a stop to oil price increases, at least P6 per liter could be taken off the prices of petroleum products that would benefit all motorists, not only jeepney and tricycle drivers. “It seems he (President Aquino) was just compelled to issue the executive order (on the 30-day fuel subsidy) because of the mass protests,” San Mateo said at the Don Chino Roces (formerly Mendiola) Bridge near Malacañang where a Piston-led transport caravan ended. Caravan After Mr. Aquino announced the subsidy, some 1,000 protesters, mostly from the transport sector, gathered at the bridge. The Piston-led transport caravan, which kicked off at Quezon Memorial Circle, reached the bridge at noon. San Mateo said the caravan drew the participation of 500 drivers and some 120 vehicles around Metro Manila. Piston was joined by members of militant groups Bagong Alyansang Makabayan (Bayan), Gabriela, Courage, Bayan Muna, Kilusang Mayo Uno, and the Koalisyon ng Progresibong Manggagawa at Mamamayan (KPMM). KPMM proposed that the President immediately remove the 12-percent value-added tax (VAT) on petroleum products and nationalize the oil industry. KPMM spokesperson Larry Tan said taking these steps – apart from putting a stop to the oil price hikes – would show that the President was true to his promise that the public was his “boss.” Approved on Monday The President said he approved the subsidy at a Cabinet meeting on Monday. He said he still didn’t have the figures for the exact subsidy per liter. “But the bottom line is they are already in the last stages of working with the Land Bank (of the Philippines) and just one other bank that will be producing the smart cards for us,” Mr. Aquino said. Malacañang said the details of the subsidy were still being finalized. “The executive order has not been signed yet. The details are still being worked out,” Communications Secretary Ricky Carandang said hours after the President made the announcement. Carandang said the subsidy would not affect the budget deficit as the measure would make use of savings by the government over the past months. Affected sectors In the House of Representatives, Bayan Muna party-list Rep. Teodoro Casiño said the fuel subsidy would not be enough to address the runaway oil prices because other sectors similarly affected were not covered. “High oil prices affect everyone, from housewives, power consumers, manufacturers, farmers and fisherfolk,” Casiño said. He said the better option would be to suspend the VAT on oil while Congress deliberated on measures reducing or removing the tax. He said the VAT windfall of P4 billion from January to March this year could reach P28 billion if prices remained high. With a report from Cynthia D. Balana |
Stocks in U.S. Fall as S&P 500 Trims Biggest First-Quarter Gain Since 1998 U.S. stocks fell, trimming the biggest first-quarter rally for the Standard & Poor’s 500 Index since 1998, as a Federal Reserve official saidinterest rates may need to rise and concern about Europe’s debt crisis grew. Berkshire Hathaway Inc. (BRK/A) lost 2.1 percent as David Sokol, once a candidate to succeed Warren Buffett as the head of the investment firm, resigned. CarMax Inc. (KMX) slumped 7.2 percent after the largest U.S. seller of used cars said margins shrunk. Home Depot Inc. (HD), Intel Corp. and American Express Co. (AXP) fell more than 1.3 percent to lead losses in the Dow Jones Industrial Average. The S&P 500 fell 0.2 percent to 1,325.83 at 4 p.m. in New York and advanced 5.4 percent during the January-March period. The Dow average dropped 30.88 points, or 0.3 percent, to 12,319.73 today. Stocks extended losses late in the session as Fed Bank of Minneapolis President Narayana Kocherlakota told the Wall Street Journal that policy makers may have to lift rates to fight inflation. “That kind of brought the market back to reality,” Michael Nasto, senior trader at U.S. Global Investors Inc., which manages $3 billion inSan Antonio, Texas, said of Kocherlakota’s comments. “We had a negative tone set. It’s another example of people being a little bit timid about going to the market simply because of what they’re hearing.” Equities fell earlier after Irish regulators instructed four banks to raise 24 billion euros ($34 billion) in additional capital following a stress test on the nation’s lenders. Portugal reported a budget deficit of 8.6 percent of gross domestic product last year, higher than a government target of about 7 percent. In the U.S., jobless claims topped economist estimates a day before the Labor Department’s monthly labor data.
Bonds headed for a second quarterly decline on concern the Fed may end its $600 billion program of debt buying earlier than planned as inflation accelerates. Minneapolis Fed President Narayana Kocherlakota said the federal funds target may need to rise by 75 basis points by late 2011, CNBC reported, citing the Wall Street Journal. “The market is reacting to yet another hawkish comment by another Fed official,” said Michael Pond, co-head of interest- rate strategy in New York at Barclays Plc, one of 20 primary dealers that trade with the U.S. central bank. “Some officials do seem more concerned about the inflation that is starting to come from the data.” Yields on benchmark 10-year notes gained three basis points, or 0.03 percentage point, to 3.46 percent at 5:32 p.m. in New York, according to Bloomberg Bond Trader prices. The 3.625 percent security due in February 2021 dropped 7/32, or $2.19 per $1,000 face amount, to 101 11/32. The 10-year note yields rose after falling as much as three basis points to 3.40 percent. They touched 3.50 percent yesterday, the highest level since March 9. U.S. debt lost 0.1 percent this quarter through yesterday, the latest available figures, after dropping 2.7 percent in the final three months of 2010, according to Bank of America Merrill Lynch indexes. Inflation-indexed debt has returned 1.9 percent since Dec. 31. |
Oil Surges to End Quarter at Two-and-a-Half Year High on Conflict in Libya Oil surged in New York to end the quarter at the highest price in two and a half years amid concern that the Libyan conflict will prolong production cuts. Prices rose 2.4 percent after troops loyal to Libyan leader Muammar Qaddafi retook control of the oil port of Ras Lanuf and were shelling Brega, another energy hub. Libyan oil production dropped 72 percent in March to a 49-year low, according to a Bloomberg News survey ofoil companies, producers and analysts. “Events in the Middle East, particularly the fighting that continues to be going on in Libya, are providing support for the market,” saidGene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market seems to be searching for a catalyst to continue the rally.” Crude for May delivery climbed $2.45 to $106.72 a barrel, the highest settlement since Sept. 26, 2008, on the New York Mercantile Exchange. Futures surged 17 percent from January through March, the best quarter since the period ended in June 2009. Oil rose 10 percent in March for a seventh straight monthly gain. That’s the longest consecutive number of increases since the contract started trading in 1983. Libyan oil production tumbled by 995,000 barrels in March to 390,000 barrels a day in the Bloomberg survey. Libya was the third-largest oil producer in Africa before the conflict and pumped 1.59 million barrels a day in January, according to data compiled by Bloomberg. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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