$400M eyed in retail onshore dollar bonds By Bernadette D. Nicolas
@BNicolasBM
T
HE Philippine government aims to raise at least $400 million (almost P20 billion) in its maiden sale of Retail Onshore Dollar Bonds to boost the state’s war chest for Covid-19 recovery and resilience programs. In its notice of offering on Monday, the Bureau of the Treasury said they will be offering five-year and 10-year Retail Onshore Dollar Bonds in US Dollar Denomination with a target aggregate minimum amount of $400 million. The minimum issue amount for each of the five-year and 10-year
Retail Dollar Bonds is set at $200 million. The pricing date for the two tenors is set for Wednesday, September 15. The start of the public offer period will also be on the same day and it will end on October 1. The Treasury will issue the debt papers on October 8. T he R et a i l O nshore Dol l a r Bonds shall be sold during the public period in minimum denominations of $300 and multiples of $100 dollars thereafter. The Treasury earlier said the offering is seen to be far more accessible than the traditional US dollar-denominated global bonds issued by
Tuesday, September 14, 2021 Vol. 16 No. 335
the Philippine government which require a minimum subscription of $200,000. Those interested to invest in Retail Onshore Dollar Bonds may purchase through the Treasury’s online ordering facility, Bonds.PH mobile app and the Overseas Filipino Bank mobile application. This year, the national government programmed to borrow a total of P3.1 trillion, most of which is set to be raised through domestic sources. The government borrows to meet its spending requirements as well as to finance its budget deficit. The economic team sees the national government’s budget deficit
this year to reach P1.86 trillion or 9.3 percent of GDP, even higher than the P1.37 trillion or 7.6 percent of GDP in 2020. In 2019, the budget deficit stood at P660.2 billion or 3.4 percent of GDP. The national government’s outstanding debt this year is also expected to balloon by the end of this year to P11.73 trillion, up by 19.8 percent from P9.795 trillion in 2020. This is also projected to further swell in 2022 to P13.42 trillion. As of end-July this year, the national government’s outstanding debt has already piled up to a new record-high of P11.61 trillion, swelling by 26.7 percent from P9.16 trillion a year ago.
PHL AUG GIR HITS $108.5B ON SDR ALLOCATION HIKE
w
n
P25.00 nationwide | 2 sections 18 pages |
‘Typhoons could push Sept inflation above 5%’
By Bianca Cuaresma
T
@BcuaresmaBM
HE Philippines added another $900 million to its arsenal, as the Bangko Sentral ng Pilipinas (BSP) reported an increase in the country’s gross international reserves (GIR) as of end-August this year. BSP Governor Benjamin Diokno told reporters on Monday that the country’s GIR hit $108.5 billion in August this year. This is $900 million higher than the previous month’s GIR and $9 billion higher than the August GIR in the previous year. The country’s GIR is the level of foreign exchange holdings being managed by the Central Bank during a given period. The GIR is a crucial component of the economy as it is often used to manage the country’s foreign exchange rate against excess volatility. The BSP attributed the increase in the country’s GIR to the additional allocation of Special Drawing Rights (SDR) to the Philippines given the IMF’s efforts to increase global liquidity amid the pandemic. It could have been higher, but was partially offset by the national government’s (NG) foreign currency withdrawals from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures, and the BSP’s net foreign exchange operations. At this level, the BSP said the GIR represents a “more than adequate external liquidity buffer” for the country, as it is equivalent to 12.3 months’ worth of imports of goods and payments of services and primary income. It is also about 7.8 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity. International analysts have lauded the country’s ability to shore up its dollar defenses during the pandemic. In its recent affirmation of the country’s credit rating, Japan Credit Rating Agency said the strong GIR of the country “demonstrate the robustness of the country’s foreign currency liquidity position.” Recently, Fitch Solutions also said the country’s substantial GIR level is expected to limit the country’s risks from running a current-account deficit through the medium term.
A
TEACHERS in protective gear distribute school supplies and uniforms to the parents of students studying at Taguig Integrated School in Barangay Santa Ana, as the academic year 2021-2022 opens on Monday, September 13, 2021, the second school year that the students are not having face-to-face education. The package includes a bag, pair of shoes, raincoats, modules and emergency kits. NONIE REYES
MOST PHL CEOS ‘DISSATISFIED’ WITH VAXX ROLLOUT By Tyrone Jasper C. Piad @Tyronepiad
M
AJORITY of the Philippines’s top business executives are not happy with the Covid-19 vaccination rollout in the country, stressing that slow inoculation hampers the economic recovery. The joint study by the PwC ( P r i c e w a t e r h o u s e C o o p e r s) Philippines and Management Association of the Philippines (MAP) revealed that 66 percent of the respondents are “dissatisfied ” with how the country is implementing the vaccination program. On the other hand, 11 percent said they are “satisfied” while 1 percent are “very satisfied.” Some 22 percent are neutral. Citing data as of September 3, the PwC-MAP report showed that the Philippines is still lagging behind its neighbors in terms of the number of fully vaccinated population with 12.9 percent. Countries like Hong Kong, Japan, Malaysia and Singapore are ahead with
PESO EXCHANGE RATES n US 49.8970
above 45-percent vaccination rate. Amid the concerns with the vaccination rollout, 76 percent of the local business honchos said the slow pace of inoculation will delay the country’s economic recovery. The business groups, to recall, have been pushing for accelerated rollout of the Covid-19 vaccines to allow further mobility and economic activities. “Despite having several stimulus programs and fiscal incentives, one thing became clear—a faster and equitable vaccination rollout worldwide is critical for the global economy to recover and to prevent the further mutations of the Covid-19 virus,” the study stressed. More than 40 percent of the respondents also cited “reliance on lockdowns to manage Covid-19” as primary threat to the economy. Majority or 70 percent of the surveyed CEOs said they suffered at least 10-percent decline on average daily sales and profits every time a hard lockdown is imposed. Metro Manila was placed under
the strictest form of community quarantine protocol for three times already amid surging Covid-19 cases. It is currently subject to modified enhanced community quarantine. “According to most CEOs surveyed, their revenues, profits, productivity, employee and customer count, and utilization decline each time the government imposes a lockdown,” the report explained. “For a consumption-driven economy, the closure of establishments such as malls, restaurants and other businesses have an immediate direct negative impact on the economy,” it added. Other factors cited by the respondents that may slow down economic recovery include political uncertainty, threats of new variant, lack of fiscal support for the struggling industries, lower investment, lower quality of education, delayed government fund release and increasing government debt.
Optimism
STILL, CEOs are optimistic. Majority (74 percent) expressed
confidence on revenue growth for their companies in the next 12 months. More CEOs (91 percent) are also anticipating better topline figures in the next three years. “To adjust to the current environment, most businesses had to adopt a remote working environment, change their products and/ or services, and invest in digital solutions,” the report said. “Having adjusted to the current reality, majority of the CEOs feel confident about their growth prospects in the next 12 months, and an even greater number of CEOs believe that their company will experience growth in the next three years.” More than half of the respondents are also expecting an above-4 percent economic growth for the country next year. They cited infrastructure development (61 percent), domestic consumption (54 percent) and government spending (52 percent) as the top growth drivers for the economy. Continued on A2
FTER accelerating to 4.9 percent in August this year, inflation could quicken above 5 percent in September as the country enters its typhoon season, a private economist has warned. In its economic commentary on Monday, ING Bank senior economist Nicholas Mapa said the higher August inflation almost certainly puts the September inflation print of the country at a risk of breaching the 5-percent mark this month. “Inflation which recently peaked at 4.9 percent last month will likely see price pressures heat up anew in September. We expect inflation to move past 5 percent as recent and approaching storm systems will undoubtedly figure into this month’s fruit and vegetable inflation numbers,” Mapa said. “Fish and meat prices will also likely remain elevated at a time when energy costs rise as crude oil has stayed close to $70/barrel. Furthermore, utility companies and retail fuel distributors have recently announced additional rounds of price increases, all adding to the supply side pressure on headline,” the economist added. He also noted that the price pressures appear to be accelerating at the “worst possible time” with base effects unfavorable in September. While inflation in the country recently shot back up to 4.9 percent and hit its highest in more than two years, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said he is keeping the BSP’s resolve to maintain low interest rates for as long as possible to support economic recovery. Mapa said the higher inflation and the current slow recovery of the country puts the BSP in a difficult position. “The current spike in inflation continues to be driven mainly by cost-push factors despite a modest pickup in mobility and economic activity. However, recent utility tariff adjustments have begun to surface and should this be followed by other signs of second round effects, such as transport or wage adjustments, the BSP may face even more pressure to resort to costly and deadly rate hikes at a time of economic hardship,” Mapa said. “A rate hike at this very delicate stage of recovery could be enough to push the economy into the tailspin that sends the Philippines deeper into recession and ultimately into a full-blown depression,” the economist said. Bianca Cuaresma
n JAPAN 0.4542 n UK 69.0525 n HK 6.4154 n CHINA 7.7432 n SINGAPORE 37.1866 n AUSTRALIA 36.6893 n EU 58.9533 n SAUDI ARABIA 13.3041
Source: BSP (September 13, 2021)