Tuesday, March 22, 2011
Philippine Markets: 22 March 2011
22 March 2011
USD/PhP: 43.39 (as of 12:00pm) PSEi: 3854.14 + 9.83
USD/JPY: 80.97 PFINC: 865.49 + 7.54
EUR/USD: 1.4220 BDO: 50.00 + 1.40
GBP/USD: 1.6302 BPI: 53.70 unch
PDSTF3M: 1.5212 MBT: 62.00 + 0.15
Prices as of 12:00pm Source: Bloomberg, Reuters
Philippines Sells $1.5 Billion of Bonds to Fund Deficit
By Clarissa Batino and Max Estayo
March 22 (Bloomberg) -- The Philippines sold $1.5 billion
of 15-year dollar debt, completing its target for global sales
to help cover this year’s budget deficit.
The government sold the 5.50 percent bonds due March 2026
at a yield of 5.55 percent, the finance department said in an e-
mail. That was below the 5.625 percent guidance announced
yesterday. Thirty percent of the securities were sold in the
U.S., 30 percent in Europe, 22 percent in the Philippines and 18
percent in the rest of Asia. Bids totaled $6.5 billion, or 6.5
times the amount on offer, Finance Secretary Cesar Purisima said
in a mobile-phone message today.
“There’s a relatively low level of supply and strong
demand for these bonds from local onshore institutions,” said
Sergey Dergachev, who helps oversee about $9.6 billion of
emerging-market debt at Union Investment Privatfonds GMBH in
Frankfurt.
Emerging-market companies and governments have sold $181
billion of bonds so far this quarter, the busiest start to a
year since Bloomberg began compiling such data in 1999. The
Philippines’ issuance brings overseas debt sales to $2.75
billion this year, exceeding the $2.5 billion originally
planned. It will help fund a budget deficit the government
estimates will narrow to 300 billion pesos ($6.9 billion) from
314.4 billion pesos last year.
Bond Yields, Peso
Five-year peso bonds gained the most in two months. The
rate on the 7 percent peso notes due January 2016 dropped 18
basis points to 5.82 percent, according to Tradition Financial
Services. The yield on the new bonds was little changed as of
9:54 a.m. in Manila, according to prices from ING Groep NV.
The dollar bonds were sold at a spread of 223.8 basis points
over U.S. Treasuries, according to a person familiar with the
matter who asked not to be identified because the details have
yet to be made public.
The extra yield investors demand to own Philippine dollar
bonds instead of Treasuries narrowed two basis points, or 0.02
percentage point, to 170 in New York. The spread reached 184 on
March 16, the widest level since Oct. 8, according to JPMorgan
Chase & Co.’s EMBI+ Philippines Sovereign Spread Index.
The peso strengthened 0.4 percent to 43.388 per dollar as
of 10:01 a.m. in Manila, the strongest level since March 10,
according to Tullett Prebon Plc.
“The Philippines moved swiftly to access the U.S. dollar
bond market and achieve low-cost, long-dated offshore funding,”
Purisima said. “This continues the Republic’s pro-active stance
in managing its sovereign debt, extending its debt maturity
profile during uncertain times for the global economy.”
Growth Target
The Philippine economy expanded 7.3 percent last year, the
most in 34 years, and President Benigno Aquino is targeting
growth of 8 percent this year. Moody’s Investors Service raised
its outlook on the nation’s debt rating in January to positive
from stable. Policy makers are studying the impact of the crisis
in Japan, the nation’s biggest trading partner and largest
source of development loans, Aquino said yesterday.
Treasurer Roberto Tan has said the latest issuance may be
the nation’s final overseas debt sale for the year. The
government’s official development loans from overseas may face
delays, Tan said. Risks arising from Japan’s earthquake may
delay an offering of yen bonds from the first half of this year,
Ricky Carandang, a presidential spokesman, said last week.
Goldman Sachs Group Inc. and HSBC Holdings Plc were lead
arrangers for the latest issue. Citigroup Inc., Deutsche Bank
AG, JPMorgan Chase & Co. and UBS AG also helped sell the notes,
the government said.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
Monday, March 21, 2011
URGENT! PHIL. ECONOMIC BRIEFING IN CDO ON MARCH 23 AT MALLBERRY
We are pleased to invite you to the Philippine Economic Briefing on 23 March 2011, Wednesday from 9:00 a.m. – 12:00 noon at the Platinum Ballroom, Mallberry Suites, Cagayan De Oro City. Registration for the event will start at 8:00 a.m.
The Briefing entitled “Daylight in the Philippines: Accelerating Progress” will be conducted by the Secretaries of the Department of Finance, Department of Budget and Management, Department of Trade and Industry, and the Director-General of the National Economic and Development Authority and the Deputy Governor of the Bangko Sentral ng Pilipinas. The briefing will focus on the economic performance in 2010 and the prospects and policy directions for 2011.
For confirmation, you may contact telephone numbers (088) 8591426 / 3016 or email at orochamber@gmail.com.
Very truly yours,
SGD.
ANTONIO D. UY
President, OROCHAMBER
Morning Brief: 21 March 2011
Japan crisis may curb PH growth in 2011 MANILA, Philippines—The government will review its growth forecast of 7 to 8 percent for the year as the disaster in Japan, a major export market and source of OFW remittances, could impact on the ability of the Philippines to hit the bullish projection. According to the Bangko Sentral ng Pilipinas, the crisis in Japan could have dampening effects on the growth of its own economy and those of its neighbors and the world over the short term. “The short-term effects of the events in Japan may be somewhat negative,” BSP Governor Amando Tetangco Jr. said. He stressed, however, that any adverse economic impact would be short-lived given aggressive efforts to rehabilitate Japan. While there was a probability that the Philippines’ growth target for 2011 might be missed because of the crisis in Japan, Tetangco said robust growth rates could still be accomplished after this year. “The medium- to long-term scenario is still positive due to ongoing rebuilding and reconstruction efforts in Japan,” Tetangco said. He said the Philippines could not remain unharmed by the disaster that struck one of the world’s biggest economies given the trade, both in terms of merchandise and labor, relationship between the two countries. Latest government documents showed that in January, goods exported by Filipinos to Japan were valued at $566 million, accounting for 14 percent of total export income of the Philippines for the month. Japan also serves as second home to many overseas Filipino workers. Remittances sent to the Philippines by Filipinos based in Japan amounted to $72.66 million in January, nearly 5 percent of the $1.48-billion total for the month. Prior to the earthquake and tsunami that struck Japan and the ensuing nuclear disaster, the Philippine government had been optimistic that the 2011 growth forecast would be attainable. Economic managers of the Aquino administration had said that favorable factors, including potentially higher investments in infrastructure, would propel the country to post yet another robust rate of expansion this year. |
| Investors set to look overseas [this] week www.cnnmoney.com NEW YORK (CNNMoney) -- Once again, investors will focus their attention abroad this week on the crises in Libya and Japan. Stocks took a beating last week as the tragic Japanese earthquake quickly became a potential nuclear catastrophe, sending investors fleeing into safer investments. The Dow fell 1.5% last week while the S&P 500 fell 1.9% and Nasdaq composite dropped 2.7%. On Friday, world leaders from the Group of 7 leading economies orchestrated a Japanese yen intervention. "This market has been so dominated by Japan, it's hard to see anything outside of that influencing investors at the moment," said Bill Stone, chief investment strategist with PNC Financial. On Friday stocks rose in part because Gadhafi had announced a cease-fire with rebels which failed to materialize. Additionally oil pricesdeclined on that news. The upcoming week's economic agenda is thin, with only a few notable reports like durable goods and initial jobless claims out later in the week. U.S. corporate earnings will once again be in focus for investors. Companies scheduled to report next week range from electronics retailer Best Buy to smartphone maker Research in Motion and software giant Oracle. Jack Ablin, chief investment officer for Harris Private Bank, said he's looking forward to seeing Best Buy's results because of its exposure to changes in U.S. consumer behavior. "The biggest mystery right now is how U.S. consumers are responding to higher gas prices," Ablin said. "Best Buy is a good company to watch to get a feel if consumers are cutting back." On the Docket: The National Association of Realtors will release its February existing home sales data at 10 a.m. ET. Economists on average expect existing home sales will fall to 5.05 million annualized units for February compared with January's 5.36 million units. Japanese markets will be closed on Monday in observance of a national holiday. Tuesday: Retailers Dollar General (DG, Fortune 500), Express (EXPR) and Walgreen (WAG, Fortune 500) will issue their results before the bell. Also reporting Tuesday is cruise line operator Carnival (CCL) and investment bank Jefferies (JEF). After the closing bell, investors will get results from software maker Adobe Systems (ADBE) and credit card company Discover (DIS,Fortune 500). There is no major economic data out on Tuesday. Wednesday: Cereal maker General Mills (GIS, Fortune 500) will report its results before the bell. Analysts expect General Mills to have a profit of 56 cents a share Investors will get February new home sales figures from the Census Bureau at 10 a.m. ET. Economists are looking for 288,000 annualized units for February, up slightly from 284,000 units in January. Thursday: Analysts expect the Best Buy (BBY, Fortune 500) to earn $1.85 a share for its first quarter, according to Briefing.com. Other names reporting before the opening bell include video game retailer GameStop (GME, Fortune 500), homebuilder Lennar (LEN) and food processor ConAgra (CAG, Fortune 500). After the bell, software giant Oracle (ORCL, Fortune 500) and smartphone maker Research in Motion (RIMM) will post their results. Analysts expect RIMM to earn $1.75 a share while Oracle is expected to earn 49 cents a share. The bulk of potentially market-moving economic data will be out on Thursday. The Labor Department will release its weekly jobless claims report while the Commerce Department will issue its February durable goods report at 8:30 a.m. ET. Economists on average expect durable good orders rose 0.9% in February compared with the 3.2% rise posted in January. Initial jobless claims are expected to remain roughly unchanged at 384,000 claims. Friday: Homebuilder KBHome (KBH) is scheduled to report before the opening bell. Wall Street will get the third and final reading of fourth-quarter U.S. gross domestic product. It's not expected to change much, with economists looking for 4Q GDP to be increased 0.1 percentage points to 2.9%. Also out Friday is the University of Michigan's consumer sentiment survey for March. The market expects a reading of 68.0. |
Oil Rises After U.S., U.K., France Begin Military Strikes Against Qaddafi Oil climbed in New York after the U.S., U.K. and France launched cruise missiles and airstrikes at targets in Libya as escalating violence curtails crude supplies from the North African nation. Futures advanced as much as 2.1 percent after Libyan leader Muammar Qaddafi vowed to repel allied forces pounding military installations. Output has fallen to less than 400,000 barrels a day, about a quarter of the production before the crisis, and may stop, Shokri Ghanem, chairman of Libya’s National Oil Co., said on March 19. The country produced 1.59 million barrels a day in January, according to estimates compiled by Bloomberg. Crude oil for April delivery gained as much as $2.12 to $103.19 a barrel, in electronic trading on the New York Mercantile Exchange, and was at $102.97 at 9:12 a.m. Sydney time. The contract, which expires tomorrow, dropped 35 cents to $101.07 on March 18. The more-actively traded May contract rose $2.14 to $103.99. A no-fly zone is now in place over Libya, Admiral Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, said yesterday. The coalition ordered Qaddafi to withdraw his forces from major cities after weeks of fighting with rebels that has left hundreds dead in the bloodiest of popular uprisings to have swept the Middle East this year. Brent crude oil for May settlement increased $2.04, or 1.8 percent, to $115.97 a barrel on the London-based ICE Futures Europe exchange. The contract fell 97 cents, or 0.8 percent, to end the session at $113.93 a barrel on March 18. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
BDO UNIBANK INC.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
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