NEWS

Thursday, October 23, 2003
Philippine govt still keen on additional foreign borrowings before end-2003
Philippine stock exchange approves two listings in December
Forex - Philippine peso closes flat in choppy trade
Philippine leader diverted money for contraceptives - UN official
Philippines' PLDT to book provisions in Q3 - CEO - UPDATE
Philippine central bank keeps policy interest rates steady
Philippine global bond issue rated 'BB', outlook stable - Fitch
Philippines' PLDT to book provisions in Q3 but FY profit goal achievable- CEO
Manila shares close lower on political concerns, weak Wall Street
Philippines lawmakers file impeachment complaint vs chief justice - officials
JP Morgan Securities Philippines' voluntary suspension of ops approved by PSE
Manila Jockey approves bonus worth 10 pct of 2002 profit for its management
Philippines to reap benefits from funding pledge for Iraq - Boncodin
Jordanian, Kuwaiti held in Philippines for alleged al-Qaeda links
Manila shares lower on extended consolidation, Wall Street weakness
Philippines Ayala Corp 117.00 mln shares crossed early morning
Philippine court appoints receiver for Bacnotan Steel's rehabilitation
STOCK ALERT - Singapore-listed Del Monte sharply lower after profit warning
Philippines' Salcon Power trading halted on deal with PSALM - PSE
Philippines' Equitable PCI Bank sells insurance unit to Philamlife
Philippines' Transco pushes back sale of assets to Q1 next year - report
Philippine Supreme Court dismisses criminal case vs central bank officers

Wednesday, October 22, 2003
Philippine central bank says likely to keep policy rates unchanged tomorrow
Philippines' Maynilad lenders invoke guarantee on 80.06 mln usd loan - Benpres
Philippines PSALM says to save 3.0 bln pesos from renegotiated Salcon contract
Philippines' Meralco says to achieve 1.0 bln pesos FY net profit goal
Philippines' South China Resources approves oil exploration business spin-off
STOCK ALERT - Philippines' ABS-CBN firmer on positive Q3 earnings outlook
Manila shares weaker on slight correction, profit-taking
Philippines, rebels to set peace talks timetable in Malaysia meeting - Ermita
STOCKWATCH - Philippines' Petron firmer on improved 9 mths, Q3 results
Forex - Philippine peso slightly weaker on follow-through dollar buying
Philippines' Ayala, Globe to close share purchase deal with DeTeAsia this mth
Manila shares outlook - Mixed to higher as more Q3 results awaited
Philippine ERC may allow Meralco debt notes issue to big customers - report
Philippine National Bank NPL ratio 50 pct as of Sept 19 vs 49 pct in June

October 20 -21
October 16 - 17
October 14 - 15
October 10 - 13
October 8 - 9
October 6 - 7
October 3 - 4
October 1 - 2

Philippine govt still keen on additional foreign borrowings before end-2003

     MANILA (AFX-ASIA) - The government has not closed the door on raising more funds through overseas borrowings before the end of the year so as to pre-fund its 2004 requirements, National Treasurer Sergio Edeza said.
     "We are considering to borrow some more before the end of the year," he said, although he declined to elaborate.
     The government recently raised 1.05 bln usd via the re-opening global bond issues due 2014, for an additional amount of 750 mln usd, and 2025 for 300 mln usd.
     HSBC, Morgan Stanley and UBS were joint lead managers.
     With the fund-raising, the government was able to cover its remaining 225. 00 mln usd funding requirements for this year, as well as some of its 1. 80-bln usd funding requirements for 2004.
     Edeza noted demand for Philippine debt issues has picked up, which the government can take advantage of.
     The government thinks it is prudent to pre-fund its 2004 requirements as it expects uncertainties in the run-up to the May elections to worry investors.
     Fitch Ratings today said it has assigned a long-term foreign currency rating of "BB" to the Philippine government's recent 750.00 mln usd global bond issue maturing 2014 and a 300.00 mln usd bond maturing in 2025
     At the same time, the agency affirmed the Philippines' long-term rating at BB, the short-term rating at "B" and the long-term local currency rating at "BB+".
     The long-term rating outlook remains stable, Fitch said, but warned that political and economic developments will remain under close scrutiny ahead of next year's presidential election.
     (1 usd = 55.24 pesos)
     afxmanilaq@afxasia.com

Philippine stock exchange approves two listings in December

     MANILA (AFX-ASIA) - The Philippine Stock Exchange said its board has approved the listing of shares of satellite provider Transpacific Broadcast Group International Inc and construction firm Supercity Realty Development Corp in December.
     Transpacific, a unit of listed ATN Holdings Inc, will list on Dec 12 and will offer 76.64 mln shares or 37 pct of its common stock at 1.18 to 1.48 pesos per share, to raise 90.4 mln to 113.4 mln pesos.
     Proceeds from the offering will bankroll a plan to provide Internet connectivity all over the country, particularly in rural areas.
     Transpacific's offering period is from Nov 17 to 28, with RCBC Capital Corp as the lead underwriter.
     Supercity will list its shares on Dec 19. It plans to issue 50 mln new common shares at 1.10 pesos per share.
     Its offering period is from Nov 25 to Dec 3, with Abacus Capital & Investment Corp as underwriter.
     Supercity will use the proceeds of 50 mln pesos for the establishment of a plant for mass production of ready-mix concrete and major raw materials for land development, purchase of capital equipment, as well as payment of loans and working capital.
     (1 usd = 55.24 pesos)
     afxmanila@afxasia.com

Forex - Philippine peso closes flat in choppy trade

     MANILA (AFX-ASIA) - The peso closed almost unchanged from yesterday's level against the US dollar following a volatile session that reflected re-emerging political and security concerns, dealers said.
     After losing more ground early in the session, the peso recovered to close flat, as demand for dollars eased towards the close of trading, they added.
     The peso closed at 55.240 to the dollar, after trading between 55.140 and 55.310, on volume of 236.50 mln usd. It closed at a month-low of 55.245 yesterday.
     "We saw a very choppy session. Although the peso closed almost unchanged from yesterday, today's trading reflected concerns over the country's security situation and the possibility of someone perceived to be not the best candidate becoming the next president of this country," a commercial bank dealer said.
     The central bank was seen in the market selling as much as 20.00-30.00 mln usd to support the local unit, another dealer said.
     "There may be follow-through (dollar) buying tomorrow and that could pull the peso down. Tomorrow's trading range is seen at 54.150-54.400," the second dealer said.
     Besides political and security concerns undermining sentiment for the peso, dealers said there has also been dollar-buying for month-end requirements.
     Popular actor Fernando Poe Junior is reportedly seriously considering making a run for presidency in the May elections under the opposition banner.
     Known more popularly as FPJ, he is being prodded to run against President Gloria Arroyo. Despite his lack of experience in politics and public service, financial markets look at him as a formidable candidate because of his mass appeal.
     Dealers said the market has discounted the Monetary Board's move to keep the central bank's policy interest rates steady.
     Earlier today, President Arroyo assured financial markets that the country's economic fundamentals remain sound.
     "I know the markets are heavily driven by perception, but let us stop scaring ourselves and move forward more rotationally," she said in a statement.
     Philippine authorities also announced today that two Arab al-Qaeda suspects had been captured and that a huge manhunt was under way in the south of the country for dozens of militants from the Jemaah Islamiyah (JI) group.
     The men were detained within the past few weeks in the southern city of Zamboanga where the authorities said they were in close contact with Islamic militants from the Abu Sayyaf and other groups. The hunt for the militants from JI, the group behind last year's bombings on the Indonesian island of Bali, was launched after the capture of the group's alleged number two in the Philippines, Indonesian Taufek Refke.
     Arroyo said Taufek had been the financier of a series of deadly bombings in Mindanao this year.
     "We will not stop until all fugitives are accounted for," said Arroyo, a key US ally in the war on terrorism and who hosted President George W Bush on his short visit here last week.
     edelacruz@afxasia.com

Philippine leader diverted money for contraceptives - UN official

     MANILA (AFX-ASIA) - There is a risk of a sharp rise in unwanted pregnancies in the Philippines after the government diverted 70.00 mln pesos allocated for contraceptives to natural family planning, a United Nations official warned today.
     The money was allocated in 2000 for contraceptives under then-president Joseph Estrada, but after he was ousted the following year, successor Gloria Arroyo diverted the funds to support natural family planning.
     "They used the money for natural family planning instead of contraceptives," said Florence Tayzon, assistant representative of the United Nations Population Fund (UNFPA) in Manila.
     Tayzon warned the continuing failure to provide contraceptives to Filipino women will inevitably lead to more illegal abortions and even bring about a rise in maternal deaths.
     "We foresee a larger number of abortions," Tayzon said, remarking that when women do not have access to contraceptives, there is usually a rise in unsafe abortions and this, in turn, results in deaths.
     Lack of access to birth control devices has contributed to the Philippines population growth rate of 2.36 pct, one of the highest in Asia, UN officials warned.
     Critics have blamed the country's population problem on the dominant Roman Catholic church, which lobbies against the use of artificial contraceptives and allows only "natural family planning" techniques, such as the rhythm method.
     Estrada was toppled in a military-backed, popular uprising, that the church supported, due to a corruption scandal.
     His replacement, Arroyo, is a devout Catholic who has said her population policy will focus on "natural family planning" methods, but will still allow couples the option of using birth control devices.
     Tayzon warned that a 1998 study has found that there are 400,000 abortions in the Philippines annually even though abortions are illegal here.
     She also cautioned that maternal mortality here stood at 172 cases per 100,000 people, also one of the highest in Asia.
     "If they don't have access to contraceptives (some of them) will resort to abortion. If women go into abortion, you have a higher risk of women dying, " Tayzon warned.
     She said studies show that the proportion of fertile Filipina women with access to contraceptives dropped from 49.5 pct in 2001 to 48.8 pct in 2002.
     Another concern are findings that more and more adolescent Filipinos are engaging in pre-marital sex, raising the risk of unwanted pregnancies, Tayzon said.

Philippines' PLDT to book provisions in Q3 - CEO - UPDATE

     MANILA (AFX-ASIA) - Philippine Long Distance Telephone Co (PLDT) will book new provisions in the third quarter, but remains confident of meeting its full-year net profit target of 9.00-10.00 bln pesos, company president and chief executive officer Manuel Pangilinan said.
     "There will be some provisioning, yes. Business is organic. There'll always be mistakes in receivables. Before, we were provisioning 45.00 pct of our revenues for bad debts," he told reporters without elaborating.
     "But we're still confident that we'll meet our 9.00-10.00 bln pesos (full-year net profit) target."
     He declined to give figures on the provisions to be made and the net profit to be booked for the third quarter.
     Analysts AFX-Asia polled expect PLDT to report a third quarter to September net profit of 2.50-3.70 bln pesos on the back of sustained robust growth in its wireless business.
     The forecast represents an earnings increase of as much as 164.00 pct over the 1.40 bln pesos posted in the third quarter of 2002. The range does not, however, take into account any one-off provisions.
     PLDT is scheduled to announce the results in early November.
     The third quarter forecasts put PLDT's full-year net profit goal of 9. 00-10.00 bln pesos, including provisions, within reach, analysts said.
     In the first half to June, the company reported a net profit of 1.80 bln pesos after provisions. Prior to the provisions, earnings stood at 6.60 bln.
     These provisions included more than 1.20 bln pesos for its manpower reduction program and over 3.50 bln pesos for the write-down of its investments and assets in Unilink/Philippine Home Cable Holdings Inc, and satellite telecommunications service providers ACeS Philippines and ACeS International Ltd, as well as receivables from Philcom Corp.
     Analysts said PLDT's third-quarter provisions may be related to the pension fund, which needed a cleanup after the manpower reduction program.
     PLDT is currently cleaning up its balance sheet in preparation for the country's adoption of the US Generally Accepted Accounting Principles (GAAP) in 2005, as well as more stringent regulatory, auditing and disclosure requirements both here and abroad.
     Pangilinan said mobile phone unit Smart Communications Inc will continue to fuel PLDT's growth, while the fixed-line segment is likely to show improvement in the coming years, particularly on the data side.
     (1 usd = 55.232 pesos)
     afxmanila@afxasia.com

Philippine central bank keeps policy interest rates steady

     MANILA (AFX-ASIA) - The Monetary Board voted to keep the central bank's policy interest rates unchanged at today's monthly policy review, citing a benign inflation environment and outlook.
     The central bank's overnight interest rates were maintained at 6.750 pct for borrowing and 9.000 pct for lending.
     "Based on the review and assessment of the prevailing macroeconomic and financial conditions bearing on the future inflation and economic activity, the Monetary Board believes that the near-term outlook for inflation remains subdued," central bank governor Rafael Buenaventura said in a statement.
     "The Monetary Board held the view that the monetary policy stance should remain well balanced given the ample liquidity in the market and limited possible upward pressures on the inflation outlook."
     The monetary authorities expect the full-year inflation rate to settle significantly below the 4.5-5.5 pct target of the government.
     In the first three quarters of the year, the inflation rate averaged 3.0 pct year-on-year.
     Inflation has been tame as "cost-push pressures and market uncertainties have diminished significantly while demand-side influences on prices remained limited," Buenaventura said.
     "Over the policy horizon, average inflation is expected to be broadly in line with the government's announced target of 4.0-5.0 pct in 2004," he said.
     Buenaventura said the central bank's policy stance should also cushion the negative impact on inflation expectations should price pressures arise, particularly from a weak peso.
     At the Philippine Dealing System, the peso closed flat at 55.240 to the US dollar against yesterday's close of 55.245, its weakest finish in about a month.
     The Monetary Board will hold its next monthly policy review on Nov 20.
     afxmanila@afxasia.com

Philippine global bond issue rated 'BB', outlook stable - Fitch

     MANILA (AFX-ASIA) - Fitch Ratings said it has assigned the Republic of Philippines' 750 mln usd global bond issue maturing 2014 and a 300 mln usd bond maturing in 2025 a long-term foreign currency rating of BB.
     At the same time, the agency affirmed the Philippines' long-term rating at BB, the short-term rating at B and the long-term local currency rating at BB+.
     The long-term rating outlook remains stable, Fitch said, but warned that political and economic developments will remain under close scrutiny ahead of next year's presidential election.
     President Arroyo's decision to stand for re-election next year offers the Philippines an opportunity to attain a measure of policy continuity, but the lead up to the election has the potential to generate considerable uncertainty in the financial and foreign exchange markets, Fitch warned.
     The agency said that after an encouraging start to the year, it fears the government's commitment to fiscal consolidation may be starting to waver as it appears bent on using the financial cushion of under expenditure built up in the first half to stimulate the economy for the rest of the year.
     Although this may reflect weak exports and the approaching election next May, it raises the risk that the Philippines could breach its budget deficit target of 4.7 pct of GDP, Fitch added.
     The Philippines is one of the few Asian countries that has not seen a build up in international reserves this year and they have stayed flat at around 13 bln usd.
     With 3.5 bln usd of external public debt falling due next year, the country will have a continued presence in international capital markets at a time of heightened political risk.
     Even so, Fitch said international liquidity is still adequate, while 2004 gross external financing needs at 19 pct of international reserves are low relative to most other BB sovereign credits.

Philippines' PLDT to book provisions in Q3 but FY profit goal achievable- CEO

     MANILA (AFX-ASIA) - Philippine Long Distance Telephone Co (PLDT) will book new provisions in the third quarter, but remains confident of meeting its full-year net profit target of 9.0-10.0 bln pesos, company president and chief executive officer Manuel Pangilinan said.
     "There will be some provisioning, yes. Business is organic. There'll always be mistakes in receivables. Before, we were provisioning 45 pct of our revenues for bad debts," he told reporters without elaborating.
     "But we're still confident that we'll meet our 9-10 bln pesos (full-year net profit) target."
     He declined to give figures on the provisions to be made and the net profit to be booked for the third quarter.
     Analysts AFX-Asia polled expects PLDT to report a third quarter to September net profit of 2.50-3.70 bln pesos on the back of sustained robust growth in its wireless business.
     The forecast represents an earnings increase of as much as 164.00 pct over the 1.40 bln pesos posted in the third quarter of 2002. The range does not, however, take into account any one-off provisions.
     PLDT is scheduled to announce the results in early November.
     The third quarter forecasts put PLDT's full-year net profit goal of 9. 00-10.00 bln pesos, including provisions, within reach, analysts said.
     In the first half to June, the company reported a net profit of 1.80 bln pesos after provisions. Prior to the provisions, it stood at 6.60 bln.
     These provisions included more than 1.2 bln pesos for its manpower reduction program and more than 3.5 bln pesos for the write-down of its investments and assets in Unilink/Philippine Home Cable Holdings Inc, and satellite telecommunications service providers ACeS Philippines and ACeS International Ltd, as well as receivables from Philcom Corp.
     (1 usd = 55.232 pesos)
     afxmanila@afxasia.com

Manila shares close lower on political concerns, weak Wall Street

     MANILA (AFX-ASIA) - Share prices closed lower on an extended technical correction, while political concerns and overnight losses on Wall Street weighed on sentiment, dealers said.
     The composite index closed down 18.30 points, or 1.32 pct, at 1,364.44, its lowest today, on volume of 424.57 mln shares valued at 1.02 bln pesos. It traded at a high of 1,379.18.
     In the broader market, losers led gainers 45 to 11, with 36 stocks unchanged.
     Dealers said investors, who are awaiting more third-quarter earnings results, were also discouraged by the peso's prevailing weakness against the US dollar.
     At the Philippine Dealing System, the peso averaged 55.232 pesos at noon after closing yesterday at a month-low of 55.245.
     Financial markets are waiting for an announcement from the camp of actor Fernando Poe Junior, who is reportedly seriously considering making a run for the Philippine presidency in the May polls under the opposition banner.
     His mass appeal, notwithstanding his lack of experience in politics and public service, is seen as a big threat to President Gloria Arroyo's bid for a full-term.
     Poe is a close friend of jailed former president Joseph Estrada, also a former actor now facing corruption charges.
     Reports of the presence in the Philippines of foreigners with alleged links to the al-Qaeda terror network also fuelled security concerns, dealers said.
     Philippine authorities have arrested a Jordanian and a Kuwaiti for alleged ties to the al-Qaeda, the immigration bureau said.
     It also cited a military intelligence report as saying a home in Zamboanga province in the southern Philippines was being used as a safehouse and meeting place for al-Qaeda operatives.
     "The main reason for this decline is a technical correction after the market earlier rose close to oversold levels, although fundamental factors show that some companies, like PLDT (Philippine Long Distance Telephone), are still cheap relative to their earnings potential," said DA Market Securities president Nestor Aguila.
     "Another reason is the political scenario, with the possibility of FPJ (Fernando Poe Junior) becoming a presidential candidate. That has fuelled pessimism and the market is likely to trade sideways with a downward bias until it has fully discounted FPJ's (possible) candidacy."
     Losses on Wall Street also provided a negative backdrop locally, he added.
     Aguila said during uncertainties "investors prefer cash, and that is probably why people are also placing their money in dollars."
     Ayala Corp was top traded following more cross sales, and closed down 0. 10 pesos at 4.90 on volume of 124.05 mln shares. Of the total turnover of 602. 24 mln pesos, 578.22 mln were cross transactions.
     PLDT fell 20.00 to 730.00 on 143,860 shares. Its New York-listed American Depositary Receipts dropped 0.25 usd to 13.50 last night.
     Security Bank was up 0.25 at 19.00 on 3.79 mln shares, mostly in cross sales.
     SM Prime was up 0.20 pesos at 7.00.
     Globe Telecom eased 20.00 to 740.00.
     Ayala Land was down 0.10 pesos at 6.50.
     Pilipino Telephone Corp, a PLDT affiliate, dropped 0.02 to 0.83 on 14.36 mln shares.
     Manila Electric B, open to foreigners, was down 0.75 at 20.75 on 1.09 mln shares. Meralco A was down 0.25 at 14.00.
     Meralco said yesterday it still expects to meet its 2003 net profit goal of 1.0 bln pesos, despite cash flow pressures which it intends to address through a proposed tariff increase of 0.1358 pesos per kilowatthour.
     Meralco is pinning its hopes of sustained profitability on higher electricity sales during the Christmas holidays.
     Bank of the Philippine Islands was down 0.50 at 45.00.
     Filinvest Land shed 0.06 to 1.16.
     The all-shares index was down 5.22 at 828.97.
     The commercial-industrial index shed 35.92 to 1,992.32, while property rose 0.88 to 612.42.
     Mining dropped 25.54 to 1,642.33, while oil was down 0.09 at 1.34.
     Banking and financial services eased 4.07 to 443.12.
     edelacruz@afxasia.com

Philippines lawmakers file impeachment complaint vs chief justice - officials

     MANILA (AFX-ASIA) - Philippine legislators today filed an impeachment complaint against Supreme Court chief justice Hilario Davide over his alleged misuse of public funds, congressional officials said.
     Eighty House of Representatives members, mainly from the opposition, sought Davide's impeachment for allegedly misusing nearly 48 mln pesos from the Judiciary Management Fund, allotted in the national budget.
     Required by law for use as a "cost of living allowance" for the 25, 000-member judiciary, the fund was instead used to purchase luxury cars, vacation homes and office furnishings of the Supreme Court justices, the complaint alleged.
     "This complaint seeks to hold Chief Justice Hilario G Davide Jr, as administrator of the Judiciary Development Fund, responsible for multiple acts of malfeasance, breach of public trust and thoughtless extravagance, in the disbursement and use of the Judiciary Development Fund," the complaint said.
     If the House endorses the complaint, Davide will go on trial in the Senate, which will decide whether or not to remove him from office.
     The last impeachment case in the Philippines occurred in Nov 2000, when incumbent president Joseph Estrada was impeached by the House and was sent to trial in the Senate.
     The trial, however, ended inconclusively when the majority of the senators refused to accept evidence supporting allegations of corruption against Estrada.
     The decision sparked a military-backed popular revolt that toppled Estrada and installed elected vice president Gloria Arroyo in his place.

JP Morgan Securities Philippines' voluntary suspension of ops approved by PSE

     MANILA (AFX-ASIA) - The Philippine Stock Exchange announced today the formal approval of JP Morgan Securities Philippines Inc's voluntary suspension of operations.
     The approval came months after the brokerage firm applied for voluntary suspension effective April 30, 2003.
     In a memorandum for brokers, PSE president Ernest Leung, said the exchange's compliance and surveillance group has found the brokerage to be in compliance with Securities and Exchange Commission and PSE rules and regulations and in the maintenance of its books and records.
     The firm has also complied with all the exchange's requirements pertaining to the suspension of its brokering and trading operations, he said.
     afxmanila@afxasia.com

Manila Jockey approves bonus worth 10 pct of 2002 profit for its management

     MANILA (AFX-ASIA) - Manila Jockey Club Inc said its board of directors has approved a management bonus equivalent to 10 pct of its 2002 net profit of 82.43 mln pesos.
     The board also gave management the authority to negotiate with Century Communities Corp for the development of the company's 18-hectare property in Carmona, Cavite, south of Manila, into a residential subdivision.
     The board, meanwhile, set for Dec 5 a special stockholders' meeting to seek confirmation and ratification of its approval for a 20 pct stock dividend.
     Also to be presented to shareholders, Manila Jockey told the stock exchange, are its planned stock rights offering and increase in authorized capital stock.
     The board earlier approved a rights offering to finance the development of a racetrack at its 77-hectare San Lazaro Leisure Park in Cavite.
     The rights offering will be issued at 1.00 peso for every share held and will be accompanied by a 20 pct stock dividend.
     The exercise will raise its authorized capital stock to 500 mln pesos from 300 mln to accommodate the proposed rights offer.
     (1 usd = 55.226 pesos)
     edelacruz@afxasia.com

Philippines to reap benefits from funding pledge for Iraq - Boncodin

     MANILA (AFX-ASIA) - The Philippines stands to benefit more in terms of job and investment opportunities even as it pledges funding support for the reconstruction of Iraq, Budget Secretary Emilia Boncodin said.
     The government has yet to formally announce the amount to be pledged for rebuilding Iraq, although there have been reports placing the amount at 1.0 mln usd.
     The amount could come either from the private sector or the national government's "international commitment fund" provided under the national budget, Boncodin said.
     It is possible for the private sector to contribute to the amount to be pledged, particularly those that are looking at investment opportunities in the reconstruction of Iraq, Boncodin said.
     If the amount is to be shouldered by the national government, she said the international commitment fund which amounts to no more than 100 mln pesos could be tapped.
     "I think we should not look at this as an expense (considering the) benefits that will be generated," she said in a local television interview.
     "And I think it is also important for us to show support for a country that is experiencing difficulties."
     The government has incurred a budget deficit of 29.138 bln pesos in September, exceeding the ceiling of 22 bln and marking the second month in a row that the deficit was above target.
     However, despite continued bigger-than-programmed spending, its budget deficit in the nine months to September of 142.703 bln pesos was below the ceiling of 149.539 bln.
     This year's budget deficit is not supposed to exceed 202 bln pesos.
     (1 usd = 55.227 pesos)
     afxmanila@afxasia.com

Jordanian, Kuwaiti held in Philippines for alleged al-Qaeda links

     MANILA (AFX-ASIA) - Philippine authorities have arrested a Jordanian man and a Kuwaiti for alleged ties to the al-Qaeda terror network, Agence France-Presse reported, citing a statement from the immigration bureau.
     Mahmoud Afif Abdeljalil, a 36-year-old Jordanian, is undergoing interrogation at the immigration office while Kuwaiti suspect Jasem Alhasan has been deported, immigration chief Andrea Domingo said in a statement.
     She also cited a military intelligence report as saying Abdeljalil's Zamboanga home was being used as a safehouse and meeting place for al-Qaeda operatives in the southern Philippines.
     The al-Qaeda is blamed for the Sept 11, 2001 attacks in the United States.
     Domingo said the second al-Qaeda suspect, Alhasan, was arrested at Zamboanga airport a few days before Abdeljalil's arrest.
     Alhasan and a Filipino Abu Sayyaf member, Ustadz Sanday, were detained but the Kuwaiti was deported on Oct 8, she added.

Manila shares lower on extended consolidation, Wall Street weakness

     (Updating with analyst comments, share prices)
     MANILA (AFX-ASIA) - Share prices edged lower as the market consolidated after recent gains, with Wall Street's losses overnight and a weaker peso dampening investor sentiment, dealers said.
     At 10.22 am, the composite index was down 11.76 points or 0.85 pct at 1, 370.98 on volume of 203.89 mln shares worth 744.01 mln pesos. It has so far traded between 1,370.98 and 1,379.18.
     Market turnover was boosted by cross transactions in Ayala Corp and Security Bank Corp, the two top-traded stocks so far.
     Ayala Corp was down 0.10 pesos at 4.90, on trade of 118.47 mln shares worth 574.66 mln pesos, while Security Bank was up 0.25 pesos at 19.00 on 3. 79 mln shares worth 72.18 mln pesos.
     Dealers said investors, who are on the sidelines awaiting more third quarter earnings results, were also discouraged by the peso's prevailing weakness against the US dollar.
     At the Philippine Dealing System, the peso averaged 55.227 pesos after closing yesterday at a month-low of 55.245.
     "The depreciation in the peso has dragged the market down since this limits the potential earnings among foreign investors," Accord Capital Equities analyst Lawrence de Leon said.
     He added investors have also opted to wait for more third quarter results to get a clearer indication of companies' year-to-date performance, even though recently released financial statements were in fact "not disappointing. "
     De Leon sees the market supported at 1,365, while resistance is seen at 1, 385.
     Philippine Long Distance Telephone Co was down 5.00 at 745.00 on 31,160 shares, on profit-taking and in line with a 0.25 usd decline in its American Depositary Receipts last night to 13.50 each.
     SM Prime was up 0.10 pesos at 6.90 on 2.73 mln shares.
     Ayala Land was down 0.10 pesos at 6.50 on 1.04 mln shares.
     Piltel dropped 0.03 pesos to 0.82 on 7.03 mln shares.
     Globe Telecom shed 15.00 pesos to 745 on 7,170 shares.
     Meralco B, open to foreigners, was down 0.25 pesos at 21.25 on 243,600 shares. Meralco A was unchanged at 14.25 on 10,000 shares.
     Bank of the Philippine Islands was down 1.00 peso at 44.50 on 96,100 shares.
     Filinvest Land shed 0.04 to 1.18 on 2.86 mln shares.
     The all-shares index was down 2.58 at 831.61.
     The commercial-industrial index shed 16.64 to 2,011.60, while property fell 3.02 to 608.52.
     Mining dropped 13.03 to 1,654.84, while oil was down 0.09 at 1.34.
     Banking and financial services eased 4.75 to 442.44.
     cecille.yap@afxasia.com

Philippines Ayala Corp 117.00 mln shares crossed early morning

     (Updating with share price)
     MANILA (AFX-ASIA) - Ayala Corp's 117.00 mln shares worth a total of 567. 45 mln pesos were sold in a cross transaction in early trade, data from the Philippine Stock Exchange show.
     The shares were sold at 4.85 pesos each, with the transactions handled by UBS Securities Philippines Inc.
     No other details were available.
     Yesterday's total turnover in Ayala Corp reached 594.17 mln pesos, of which 559.58 mln also accounted for cross sales.
     At 9.46 am, Ayala Corp was down 0.05 peso at 4.95 on 118.31 mln shares.
     (1 usd = 55.245 pesos)
     cecille.yap@afxasia.com

Philippine court appoints receiver for Bacnotan Steel's rehabilitation

     MANILA (AFX-ASIA) - The Securities and Exchange Commission has appointed lawyer Danilo Concepcion as receiver for the rehabilitation of Bacnotan Steel Industries Inc, its parent unit Bacnotan Consolidated Industries told the stock exchange.
     Early this month, Bacnotan Consolidated and other creditors of unit Bacnotan Steel filed a petition for rehabilitation of the latter with a Makati regional trial court.
     Bacnotan Consolidated, which directly owns a 30 pct stake in Bacnotan Steel, said the unit owed it 67 mln pesos as of Dec 31, 2001.
     (1 usd = 55.245 pesos)
     afxmanila@afxasia.com

STOCK ALERT - Singapore-listed Del Monte sharply lower after profit warning

     SINGAPORE (AFX-ASIA) - Philippines-based Del Monte Pacific Ltd was sharply lower in early morning trade after warning that net profit for the year may post a greater than expected decline, dealers said.
     Del Monte was down 0.025 sgd or 1.07 pct at 1.85 on volume of 5.4 mln shares.
     (1 usd = 1.73 sgd)
     rosana.gulzar@afxasia.com

Philippines' Salcon Power trading halted on deal with PSALM - PSE

     MANILA (AFX-ASIA) - Trading in shares of Salcon Power Corp has been halted pending clarification by the power producer of reports on its re-negotiated contract with the government, the Philippine Stock Exchange said.
     The Power Sector Assets and Liabilities Management Corp (PSALM) said yesterday it re-negotiated the terms of the government's power purchase contract with Salcon Power, which will result in savings of about 3.0 bln pesos for the government.
     The contract with Salcon, which operates a power plant complex in the central Philippines, is among those signed with so-called independent power producers, which the government has sought to restructure to cut down costs that are eventually passed on to consumers.
     The settlement also involved the buy-out of the Salcon's contract to operate two land-based gas turbines with a 27.5-megawatt capacity each, said PSALM president Edgardo del Fonso.
     Salcon's 15-year contract with the government is supposed to expire in 2009.
     (1 usd = 55.245 pesos)
     edelacruz@afxasia.com

Philippines' Equitable PCI Bank sells insurance unit to Philamlife

     (Updating with acquisition cost, other details)
     MANILA (AFX-ASIA) - Equitable PCI Bank said it has sold 95.0 pct of insurance unit Equitable PCI Life to Philamlife, the local unit of US insurance giant AIG.
     In a disclosure to the stock exchange, the bank said Philamlife acquired 14.25 mln shares of EPCI Life for 66.82 mln pesos.
     The bank said it will retain a 5.0 pct stake in the new insurance company so that it can be legally qualified to market the latter's products and services.
     Renamed Philam Equitable Life Assurance Company Inc (PELAC), the new company will offer a portfolio of insurance products and services to Equitable PCI Bank's nearly 2 mln customers.
     "We are confident this partnership will prove most advantageous to our customers who will be offered a broad array of insurance product offerings, which should reinforce the bank's position as a quality service provider," Equitable PCI Bank chairman Antonio Go said.
     (1 usd = 55.245 pesos)
     cecille.yap@afxasia.com

Philippines' Transco pushes back sale of assets to Q1 next year - report

     MANILA (AFX-ASIA) - The government has pushed back the privatization of its transmission assets to the first quarter of 2004, the BusinessWorld newspaper reported, quoting a government official.
     Power Sector Assets and Liabilities Management Corp (PSALM) president Edgardo del Fonso said negotiations for the privatization of the transmission assets have not taken off because Singapore Power, the only firm that expressed interest in operating Transco, is not ready.
     "We are now in the position where we can initiate the negotiations, but the other party is undergoing restructuring... By the first quarter of 2004, the negotiation will start," del Fonso said.
     PSALM is the residual company of Napocor, which will be tasked to take over the liabilities and assets of the power firm it has been privatized.
     cecille.yap@afxasia.com

Philippine Supreme Court dismisses criminal case vs central bank officers

     MANILA (AFX-ASIA) - The Supreme Court has upheld the decision of the Office of the Ombudsman to dismiss the criminal complaint against central bank governor Rafael Buenaventura and five other officials in connection with the closure of Urban Bank in 2000.
     The court's five-page resolution issued by the Tribunal's third division effectively rejected the petition of former Urban Bank President Teodoro Borlongan to have the central bank officials tried for graft.
     "In resolving whether or not the Ombudsman committed grave abuse of discretion, a review of the evidentiary facts is necessary. This we cannot do for this Court is not a trier of facts," the Supreme Court said.
     It also noted that the determination of probable cause lies within the sound discretion of the Ombudsman.
     cecille.yap@afxasia.com

Philippine central bank says likely to keep policy rates unchanged tomorrow

     MANILA (AFX-ASIA) - The central bank's Monetary Board is likely to keep policy interest rates unchanged at tomorrow's monthly review, despite the peso's current weakness against the US dollar, central bank governor Rafael Buenaventura said.
     The central bank's overnight borrowing and lending rates are at 6.750 pct and 9.000 pct, respectively, their lowest levels in 11 years.
     Buenaventura attributed the peso's decline to banks' moves to cover their "short" dollar positions.
     He said the central bank was not in the spot market today.
     "I believe the peso will eventually recover," Buenaventura told reporters, without elaborating.
     At the Philippine Dealing System, the peso closed at 55.245 after trading between 54.880 and 55.250 on volume of 220.70 mln usd. It closed at 54.850 yesterday.
     afxmanila@afxasia.com

Philippines' Maynilad lenders invoke guarantee on 80.06 mln usd loan - Benpres

     MANILA (AFX-ASIA) - Benpres Holdings Corp said lenders of unit Maynilad Water Services Inc are invoking the shareholders' guarantee on its 80.06 mln usd bridge loan.
     In a disclosure to the stock exchange, Benpres said it "believes the action has no significant impact in its current negotiations with creditors for financial restructuring."
     Benpres has already included its share of the Maynilad bridge loan obligation of 48.036 mln usd within the total on and off-balance sheet liabilities totaling 551.5 mln usd.
     Benpres owns 59.0 pct of Maynilad, which provides water and sewerage services to some parts of metropolitan Manila.
     "All bridge lenders are in fact active participants in the Benpres balance sheet management plan discussions and are represented in the overall creditors committee that meets regularly with the company on all issues regarding its debt restructuring efforts," Benpres said.
     Benpres earlier said it hopes to complete debt restructuring negotiations with creditors within the year.
     (1 usd = 55.03 pesos)
     cecille.yap@afxasia.com

Philippines PSALM says to save 3.0 bln pesos from renegotiated Salcon contract

     MANILA (AFX-ASIA) - The Power Sector Assets and Liabilities Management Corp (PSALM) said it re-negotiated the terms of the government's power purchase contract with Salcon Power Corp, which will result in savings of about 3.0 bln pesos for the government.
     The contract with Salcon, which operates a power plant complex in the central Philippines, is among those signed with so-called independent power producers, which the government has sought to restructure to cut down on costs that are eventually passed on to consumers.
     PSALM president Edgardo del Fonso said the settlement also involved the buy-out of the Salcon's contract to operate two land-based gas turbines with a 27.5-megawatt capacity each.
     Salcon's 15-year contract with the government is supposed to expire in 2009.
     (1 usd = 55.00 pesos)
     afxmanila@afxasia.com

Philippines' Meralco says to achieve 1.0 bln pesos FY net profit goal

     MANILA (AFX-ASIA) - Manila Electric Co still expects to meet its 2003 net profit goal of 1.0 bln pesos, despite cash flow pressures that it intends to address through a proposed tariff increase of 0.1358 pesos per kilowatthour, company president Jesus Francisco said.
     Meralco is pinning its hopes of sustained profitability on higher electricity sales during the Christmas holidays.
     "We're hoping sales will go up at the end of the year," he told reporters at a news briefing, although he declined to give figures.
     Meralco officials also refused to provide any indications on the company's third quarter results.
     "The projected (1.0 bln) net income was based on the rate unbundling approved in June (and does not take into account the new rate hike petition), " Francisco said, adding he "believes" the profit goal remains achievable even without the rate hike.
     Meralco has asked the Energy Regulatory Commission to approve provisionally its latest tariff hike petition, claiming that cash flow constraints remain critical due to the combined need to operate and maintain its electric system, undertake planned projects, service maturing loans and return overcharges to customers.
     The company expects the proposed tariff hike, if approved, to boost monthly revenue by 260.00 mln pesos.
     Ivanna de la Pena, head of the company's utility economics division, reiterated Meralco's need for a rate adjustment is "urgent," saying the company's critical financial condition has seriously hampered its ability to source new funding and roll-over its short-term loans.
     She said Meralco's return on rate base for 2003 is projected to reach only 7.9 pct and will fall to 7.1 pct in 2004, without the rate increase approval. Under its covenant with lenders, Meralco is required to keep its RORB above 8.0 pct, or otherwise be in technical default.
     During the press conference, de la Pena also denied accusations of several consumer groups that it is overcharging its customers, and said the accusations were baseless and founded on wrong assumptions.
     The country's biggest power distributor reported a second quarter net profit of 391.00 mln pesos, down 27.30 pct year-on-year, but a turnaround from the first quarter's net loss of 325.00 mln.
     Its first half to June net profit fell to 66.09 mln pesos from 465.24 mln the previous year.
     The company attributed the turnaround to a tariff hike and a 2.80 pct year-on-year increase in sales volume in the second quarter.
     Despite cash flow pressures, Meralco was able to settle 44.00 mln usd in debt obligations in September and October.
     In 2004, it expects maturing debts to reach 11.00 bln pesos, Meralco vice-president and treasurer Rafael Andrada said.
     (1 usd = 55.00 pesos)
     afxmanila@afxasia.com

Philippines' South China Resources approves oil exploration business spin-off

     MANILA (AFX-ASIA) - South China Resources Inc said its shareholders have approved a proposal to spin off its oil exploration assets and activities to a wholly-owned subsidiary to be established.
     Shareholders also approved the company's proposal to change its primary function to that of a holding company.
     It did not elaborate further in its disclosure to the stock exchange.
     afxmanila@afxasia.com

STOCK ALERT - Philippines' ABS-CBN firmer on positive Q3 earnings outlook

     MANILA (AFX-ASIA) - ABS-CBN Broadcasting Corp was higher on expectations of improved third quarter earnings after sustaining monthly revenue of at least 1.0 bln pesos from May to September, dealers said.
     ABS-CBN was up 1.00 pesos at 29.00 on 202,600 shares. Its Philippine Deposit Receipts rose 1.50 to 29.50 on 608,700 shares.
     "I think investors are just positioning themselves ahead of the third quarter earnings of ABS-CBN," Citiseconline.com analyst Mark Alan Canizares said.
     ABS-CBN recovered from weak advertising revenues last year to book a net profit of 507 mln pesos in the first half to June. It suffered a net loss of 100 mln in the same period last year.
     The network has already exceeded its 2002 net profit of 165.7 mln pesos.
     In the second quarter of this year, net profit stood at 399 mln pesos, up 271 pct year-on-year.
     ABS-CBN expects to book net profit of over 1.00 bln pesos this year.
     (1 usd = 55.00 pesos)
     edelacruz@afxasia.com

Manila shares weaker on slight correction, profit-taking

     MANILA (AFX-ASIA) - Share prices were weaker in thin trade due to a slight correction and profit-taking after yesterday's strong gains, dealers said.
     The market is consolidating as investors await more third-quarter corporate results, they added.
     At 10.37 am, the composite index was down 6.12 points, or 0.44 pct, at 1, 379.97 on volume of 124.92 mln shares valued at 149.4 mln pesos. It has moved between 1,379.42 and 1,385.44 so far.
     In the broader market, losers led gainers 19 to 10, with 30 stocks unchanged.
     The peso's slide back to 55.000 against the US dollar level this morning may have also been used as an excuse to lock in recent gains, dealers said.
     At the Philippine Dealing System, the peso averaged 54.999 to the dollar after closing yesterday at 54.850.
     Dealers added the market is taking a breather, while closely watching developments on the political front.
     After President Gloria Arroyo's announcement that she will seek a full term in next May's polls, investors are waiting for the final line-up of candidates of the opposition, dealers said.
     "The market is going through a slight correction. I think it is also digesting political developments. This correction is expected as the market has risen to near the 1,400 resistance," Summit Securities president Harry Liu said.
     However, he said the market may again test the 1,400-point resistance level in the coming days, depending on the quality of third-quarter corporate earnings to be announced.
     Philippine Long Distance Telephone was top traded so far and down 5.00 pesos at 760 on 28,990 shares.
     edelacruz@afxasia.com

Philippines, rebels to set peace talks timetable in Malaysia meeting - Ermita

     MANILA (AFX-ASIA) - Philippines officials and rebel Muslim representatives are to meet in Malaysia early next month to set a timetable for formal talks to end the 25-year southern Philippines rebellion, Defense Secretary Ed Ermita said today.
     President Gloria Arroyo's government and the Moro Islamic Liberation Front (MILF) agreed with Malaysian officials to hold their "last exploratory talks" in Kuala Lumpur after Prime Minister Mahathir Mohamad turns over power to Deputy Premier Abdullah Badawi on Oct 31, Ermita said.
     Ermita said he expects the early November meeting to set the timetable for the "reopening of the formal negotiations of the two panels."
     The 12,500-member MILF has been waging an armed campaign to set up an Islamic state on the southern third of the largely Roman Catholic Philippines.
     Manila has been under pressure to settle the rebellion through political means to deny foreign Islamic militants, particularly the Jemaah Islamiyah, an operational base in their armed bid to set up an Islamic caliphate in Southeast Asia.
     The MILF renounced terrorism earlier this year and US President George W Bush said during a state visit here last week that Washington will extend up to 30 mln usd in development aid to the southern Philippines once a peace treaty is signed.

STOCKWATCH - Philippines' Petron firmer on improved 9 mths, Q3 results

     MANILA (AFX-ASIA) - Oil refiner Petron Corp was firmer after announcing improved earnings for both the nine months to September and the third quarter on the back of increased export sales and lower operating expenses, dealers said.
     At 10.13 am, Petron was up 0.02 pesos at 2.06 on volume of 2.64 mln shares.
     The composite index was down 6.11 points, or 0.44 pct, at 1,379.98.
     The company reported yesterday a net profit of 2.02 bln pesos for the nine months to September, up 10.00 pct year-on-year from 1.84 bln pesos.
     In the third quarter to September, net profit rose to 741.00 mln pesos from 602 mln in the same period last year.
     Petron's export volumes grew 27.00 pct year-on-year in the January-September period to increase revenue 22.7 pct to 81.10 bln pesos.
     "The results are encouraging and Petron's full-year net profit may rise more than 10.00 pct given that fourth quarter sales are expected to be stronger. The company has also been streamlining its costs and that also helps," said Regina Capital Development Corp analyst Gomer Tan.
     Petron reported a net profit of 2.90 bln pesos for 2002.
     (1 usd = 55.00 pesos)
     edelacruz@afxasia.com

Forex - Philippine peso slightly weaker on follow-through dollar buying

     MANILA (AFX-ASIA) - The peso was slightly weaker in early trade on follow-through buying of the dollar among corporates rushing to satisfy their month-end financing requirements, dealers said.
     They added the peso is undergoing a technical correction, after a steady rise recently, as banks who have earlier aggressively sold down their dollar hoards started to cover their "short" positions.
     Disappointing economic data released early this week provided the excuse.
     At 9.43 am, the peso has averaged 54.930 after trading between 54.880 and 54.95 on volume of 44.00 mln usd so far. It closed at 54.850 yesterday.
     "The peso was really due for a correction after having appreciated steadily from the mid 55.000 level several weeks ago. News of a higher-than-target budget deficit for September and lower imports in August triggered the short-covering," a local bank dealer said.
     The peso is seen testing the 55.000 psychological resistance level in today's trade in the absence of any central bank intervention, dealers said.
     cecille.yap@afxasia.com

Philippines' Ayala, Globe to close share purchase deal with DeTeAsia this mth

     MANILA (AFX-ASIA) - Ayala Corp said it expects to close a deal with Deutsche Telekom AG unit DeTeAsia Holdings GmbH on the purchase of the latter's 10.03 mln shares in Globe Telecom Inc on Oct 30.
     Separately, Globe said it will close its deal to repurchase 12 mln of its shares from DeTeAsia on Oct 24.
     The transactions are still subject to regulatory approvals, they said.
     The shares are to be bought at 680 pesos each.
     Singapore Telecommunications Ltd (SingTel) said its wholly-owned subsidiary Singapore Telecom International Pte Ltd is expected to complete its purchase of 15.64 mln common shares of Globe also at 680.00 pesos each from DeTeAsia also on Oct 30.
     Following the purchase, SingTel and Ayala Corp will each hold 42.70 pct of Globe.
     The shares bought back by Globe account for 7.90 pct of its total outstanding common shares.
     (1 usd = 54.85 pesos)
     edelacruz@afxasia.com

Manila shares outlook - Mixed to higher as more Q3 results awaited

     MANILA (AFX-ASIA) - Share prices are expected to open mixed to higher on further positioning in stocks seen to deliver a positive earnings performance in the third quarter, dealers said.
     But buying may taper off or profit-taking set in near the key index's major resistance at the 1,400-point level, they added.
     Yesterday, the composite index closed up 17.23 points, or 1.26 pct, at an 18-month high of 1,386.09, largely driven by gains in Philippine Long Distance Telephone Co followed by Ayala stocks.
     "We may see continued buying, with investors still focused on companies that are expected to declare favorable earnings. But investors may pause when the index gets closer to 1,400," said Astro del Castillo, a director of the Association of Securities Analysts of the Philippines.
     "Focus will still be on telecom and consumer stocks."
     "The negative breadth and share prices reaching new highs may prompt some profit-taking in the near term," AB Capital Securities research director Jose Vistan Jr said.
     "Gains have been becoming less broader as economic reports haven't been all that encouraging."
     On Monday, the government reported its budget deficit swelled beyond target for a second month in a row to 29.1 bln pesos in September, while merchandise exports dropped 8.5 pct year-on-year in August.
     (1 = 54.85 pesos)
     edelacruz@afxasia.com

Philippine ERC may allow Meralco debt notes issue to big customers - report

     MANILA (AFX-ASIA) - The Energy Regulatory Commission (ERC) is open to allowing Manila Electric Co to issue debt notes, instead of cash refunds, to its commercial and industrial customers, BusinessWorld newspaper quoted ERC chairman Manuel Sanchez as saying.
     "For as long as businesses will accept that, and if all parties will agree, then the (commission) is okay with the proposal," he said.
     But he said the ERC will still have to check if the Meralco proposal violates any law.
     The country's largest distributor has been ordered by the Supreme Court to return overcharges to customers dating back to 1994, which the company expects to cost about 30.5 bln pesos.
     Meralco has so far paid 2.75 bln pesos either in cash or bill rebates to customers with electricity consumption of no more than 300 kilowatthours monthly.
     Earlier Meralco's estimates placed the refund to industrial and commercial customers, comprising the bulk of its big users, at 18.0-20.0 bln pesos.
     (1 usd = 54.85 pesos)
     afxmanila@afxasia.com

Philippine National Bank NPL ratio 50 pct as of Sept 19 vs 49 pct in June

     MANILA (AFX-ASIA) - Philippine National Bank said its non-performing loans (NPL) of 48.06 bln pesos accounted for 50 pct of total loan portfolio as of Sept 19 compared with 49 pct as of June 19.
     In its published statement of condition, the bank said it set aside 16.43 bln pesos as specific provisions for loan losses as of Sept 19, while general provisions totalled 1.54 bln.
     Return on equity stood at 0.9 pct.
     (1 usd = 54.85 pesos)
     edelacruz@afxasia.com