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Wednesday January 28, 2004
Japan, Philippines to begin free trade talks in early February
Singapore-listed Fastech FY net loss 4.52 mln usd vs 6.39 mln
Philippines' Music says quasi-reorganization approved by SEC
Philippine peso falls on 'temporary' mix of factors - Buenaventura
Forex - Philippine peso at record low close on rating downgrade worries
Philippines awards gas/oil exploration contract to Singapore's G2G - Perez
Philippines' Arroyo woos big business ahead of May vote
Philippines' Petron set to complete 5.4-bln hydrotreater facility this year
Philippine Savings Bank 2003 net profit 403.6 mln pesos, up 33 pct yr/yr
Manila shares close lower on Wall St fall, Moody's sovereign rate cut
OUTLOOK - Philippines San Miguel 2003 net profit seen at 7.0-7.3 bln pesos
Manila shares slightly lower on profit-taking
STOCK ALERT - Philippines' Meralco firmer after court hearing on rate hike
Philippines' RCBC appoints Magsajo president, COO
Philippines Nov manufacturing output volume down 8.0 pct yr-on-yr
Philippines' PLDT foreign currency rating raised to Ba2 - Moody's

Tuesday January 27, 2004
BIRD FLU - Bird flu could cause huge damage if leads to travel scare - ADB
Philippine CPI seen to remain manageable despite weaker peso - Buenaventura
Philippine banks' ratings cut in line with sovereign downgrade - Moody's
Philippines must set higher standards for presidential candidates - Ramos
Asia's poor lack access to safe water due to vested interests - experts
Forex - Philippine peso recovers after Moody's one-notch downgrade - UPDATE
Philippines' Arroyo asks opponents to shun politicking to stem peso fall
OUTLOOK- Philippines Globe Telecom 2003 net profit seen at 8.5-11.1 bln pesos
Philippines 'will defer borrowing' after Moody's sovereign ratings cut - Edeza
Philippines' PLDT declares cash dividends on preferred shares
Philippines' Napocor long-term debt rating cut to Ba2 - Moody's
Manila shares close at 34-month high on interest in blue chips
Outlook for Asia-Pacific sovereign ratings generally stable in 2004 - S&P
ROUNDUP - Moody's downgrades Philippine ratings on fiscal, political concerns
Philippines' Globe says US FCC lifts stop-payment order on AT&T, MCI, Sprint
BIRD FLU-WHO warns poultry culls must be carried out with protective equipment
Philippine ratings cut on fiscal/political concerns, says Moody's
Philippine peso aided by better-than-expected Moody's news- Buenaventura
Manila shares firmer mid-trade after better-than-expected Moody's ratings cut
Forex - Philippine peso recovers after Moody's one-notch downgrade
STOCK ALERT - Singapore-listed Medtecs higher on bird flu outbreak
STOCK ALERT - Philippines' Meralco lower on ERC rate cut order
Philippines' Music seeks indefinite suspension on equity restructuring
Philippines' RCBC to invest extra 43.3 mln pesos in Pilipinas Shell
Philippine Fil-Hispano suspension lifted today - PSE
Federation of Philippine Industries opposes DST increase on debt papers

January 23 - 26
January 21 - 22 
January 19 -20 
January 16 -17 
January 14 -15 
January 12 - 13  
January 8 - 9 
January 6  -  7
January 04 - 05


 

 

Japan, Philippines to begin free trade talks in early February


     TOKYO (AFX-ASIA) - Japan and the Philippines will begin their first negotiations on concluding a free trade agreement in early February in Manila, a Japanese foreign ministry official said.
     Ichiro Fujisaki, deputy minister for foreign affairs, will head the Japanese mission to the two-day meeting in which the two sides are to discuss procedures in negotiations and items to be covered in the accord, the official said.
     Japanese Prime Minister Junichiro Koizumi and Philippine President Gloria Arroyo agreed to begin free trade talks in December, when they met in Tokyo for a dialogue between Japan and the Association of Southeast Asian Nations (ASEAN).
     Koizumi has agreed on similar initiatives with his Malaysian and Thai counterparts.
     Japan's first bilateral free trade agreement, with fellow ASEAN member Singapore, took effect in November last year.
 

 

Singapore-listed Fastech FY net loss 4.52 mln usd vs 6.39 mln


     SINGAPORE (AFX-ASIA) - Phillipine-based semiconductor assembly and test services provider Fastech Synergy Ltd year to December results:
      Sales - 18.34 mln usd vs 17.24 mln
      Net loss - 4.52 mln usd vs 6.39 mln
      Loss per share - 0.028 usd vs 0.041 usd
      Final dividend - nil; unchanged
     (1 usd = 1.69 sgd)
     denise.wee@afxasia.com
 

 

Philippines' Music says quasi-reorganization approved by SEC


     MANILA (AFX-ASIA) - Music Corp said the Securities and Exchange Commission (SEC) has approved its quasi-reorganization.
     The SEC has approved Music's equity restructuring to partially wipe out its deficit of 1.46 bln pesos as of end-2002 against an additional paid-in capital of 867.75 mln pesos.
     It also approved a decrease in the semiconductor firm's authorized capital to 100 mln pesos from 500 mln, and in par value to 0.20 from 1.00 peso.
     The SEC thereafter approved an increase in par value back to 1.00 peso from 0.20.
     Trading in Music shares has been indefinitely suspended since Tuesday at the company's request.
     Music last closed at 0.37 peso.
     (1 usd = 55.90 pesos)
     edelacruz@afxasia.com
 

 

Philippine peso falls on 'temporary' mix of factors - Buenaventura


     MANILA (AFX-ASIA) - Central bank governor Rafael Buenaventura said the peso's renewed weakness was largely due to "a confluence of factors" that included higher dollar demand among companies, lower remittances from overseas, a stronger US dollar across the region and concerns over the conduct of the May general elections.
     The local currency today ended at a new record low close of 55.90 versus the US dollar on volume of 165.8 mln usd. It closed at 55.75 yesterday.
     "This is all temporary and the market will correct itself," Buenaventura said.
     Companies usually beef up their dollar position for their month-end financing requirements, while remittances from overseas Filipino workers are traditionally lower past the Christmas holidays.
     Still, Buenaventura said the central bank is closely watching banks' foreign exchange transactions to guard against possible speculative plays.
     "All banks are saying they are within their limits. The central bank is also checking on sales (to see) if they are all properly documented," Buenaventura said.
     cecille.yap@afxasia.com
 

 

Forex - Philippine peso at record low close on rating downgrade worries


     MANILA (AFX-ASIA) - The peso ended at its weakest closing level ever at 55.900 to the US dollar, with the market worried over a possible further downgrade of the country's sovereign ratings, dealers said.
     They said the market will continue to test the 56 level, which may be hit within the week amid worries that rating agencies may further cut the country's ratings due to prevailing uncertainties in the run-up to the May elections.
     The central bank was, however, seen in the market today supporting the peso at various levels.
     The peso closed at its intraday low after trading at a high of 55.745 on volume of 165.80 mln usd. It erased the previous record closing low of 55.850 on Jan 26.
     The peso fell to an all-time intraday low of 55.920 yesterday, before Moody's Investors Service announced a one-notch downgrade of the country's foreign currency rating to Ba2, instead of two notches as initially feared by financial markets.
     The local currency closed at 55.75 yesterday.
     But a local commercial bank dealer said: "The market remains very cautious after the downgrade. It's a confirmation of something that's not good. Although better than expected, it's still negative especially as far as the corporates are concerned.
     "The central bank was seen supporting the peso at various levels," the dealer said, adding that the central bank may have unloaded some 50 mln usd worth of dollars on the spot market today.
     Central bank officials were not immediately available for comment.
     "I think the 56 level will be hit very soon, possibly within the week," the dealer said.
     While Moody's just aligned its ratings with those of Standard & Poor's and Fitch Ratings, it said it cut the country's ratings due to "concerns that the government's recent progress in containing fiscal imbalances has not been sufficient to reduce vulnerability to shocks that might be transmitted between the budgetary and external accounts," as well as to the country's unsettled political dynamics.
     The outlook is negative, Moody's said.
     The sovereign ratings downgrade was followed by ratings cuts for at least seven of the country's biggest banks and the National Power Corp.
     edelacruz@afxasia.com
 

 

Philippines awards gas/oil exploration contract to Singapore's G2G - Perez


     MANILA (AFX-ASIA) - The Department of Energy (DoE) said it is to award a 4 mln usd drilling contract to Singapore-based Gas to Grid Pte Ltd (G2G), the second petroleum service contract (SC) to be signed this year.
     Energy Secretary Vincent Perez said G2G managing director David Alistair Munns will sign at 5 pm today the seven-year SC, which covers 2,415 square meters of onshore development in the central Cebu areas with the Visayan petroleum basin.
     He said that based on the results of drilling activities done in the area as early as 1960, the contract area contains undeveloped natural gas and oil reserves.
     But further drilling and testing activities are needed to determine the commercial viability of the area.
     "If found to be commercially viable, the natural gas can be used to fuel proposed small power facilities in Cebu to meet the ever increasing power demand in the Visayas particularly in the Cebu-Negros-Panay grid," Perez said in a statement.
     According to the DoE, G2G has been involved in petroleum exploration and development in Southeast Asia for over 25 years, and is involved in a gas-fired power station development in Australia.
     "The company hopes to apply the same experience and technology in their Cebu project," Perez said.
     The G2G contract will be extended to a 25-year production phase if the area contains commercial quantities of oil or gas, the DoE said.
     "Our exploration industry has finally rebounded with the signing of yet another service contract. We are optimistic that this renewed interest from foreign and local exploration firms will be sustained as we get closer to the March deadline of our first Philippine Petroleum Contracting Round (PCR-1)," Perez said.
     The contract signing with G2G follows the award of a 4.6-mln usd service contract two weeks ago to Premier Oil Philippines BV, which covers the exploration of Ragay Gulf in the Bicol region and parts of the Bondoc Peninsula in Quezon province.
     Last week, the government announced a joint venture between Malaysia's Petronas Carigali Overseas Sdn Bhd and the state-owned Philippine National Oil Co, through its unit PNOC Exploration Corp, covering a 15-18 mln usd exploration project in Mindoro.
     edelacruz@afxasia.com
 

 

Philippines' Arroyo woos big business ahead of May vote


     MANILA (AFX-ASIA) - Philippines President Gloria Arroyo today urged big business to back her bid for election in a May vote, dismissing her main rival as an "untested gamble."
     Lagging in opinion polls behind Fernando Poe, a movie star friend of deposed leader Joseph Estrada, Arroyo pledged six million jobs, universal health insurance and nearly one million homes for the poor over a six-year term.
     "As the business leaders of this nation I know you share my hope and my concern," the US-trained economist said in a speech to business groups.
     "You have a clear choice," she said.
     Big business could "unify the nation around sound economic leadership" and thereby enhance the country's standing in the international community, "or you can take a gamble on untested leadership."
     Such a choice, she said, without mentioning high school drop-out Poe by name, would make this Southeast Asian nation "the laughing stock of the world. "
     Former vice president Arroyo came to power in 2001 amid a military-backed popular revolt that ended the corruption-tainted 30-month presidency of Estrada, also a former movie star and college drop-out.
     Arroyo said she had made the lives of Filipinos better in her three years of interim stewardship despite street riots and a military rebellion allegedly waged by Estrada supporters.
     "We have wrested the economy from the precipice," she said, while warning that it could "just as easily fall backward" next May.
     "The nation is at a crossroads, whether to move forward to (becoming) a modern, progressive nation or to move backward to the old formulas that led to the chaos that we inherited."
     Over three years, Arroyo said she had created three million jobs, double those created in the previous three years, boasting that foreign investment was 20 pct up last year.
     Inflation, at 3.1 pct, was the lowest in a generation, with industrial strikes at a 20-year low and wages rising 11.2 pct in real terms as market reforms created better-paying jobs, she said.
     "These are only a start. We must do better and we will do better," she said.
     Arroyo said she had "stopped the scourge of drugs and wiped out terrorism. "
     She pledged to change the "culture of corruption" in the Philippines and to pursue a police crackdown on kidnapping gangs that have targeted the business community.
     "I will be ready to lead from a position of strength and experience," she said. "There is no room for half-measures."
 

 

Philippines' Petron set to complete 5.4-bln hydrotreater facility this year


     MANILA (AFX-ASIA) - Petron Corp is set to complete before the end of the year the construction of its 5.4-bln peso isomerization and hydrotreater facility that would enable the country's largest oil refiner to produce environment-friendly fuels, company officials said.
     "We are on schedule. We will finish the desulfurization and hydrotreater plants by the end of the year," Petron vice president Jose Campos said.
     Petron public affairs manager Virginia Ruivivar said a portion of the 5. 4-bln budget had already been spent on equipment needed for the new facility.
     Under the Clean Air Act (CAA), oil companies are mandated to reduce the sulfur content of automotive diesel oil to 0.05 pct by January this year.
     It also requires maximum aromatics and benzene content of 35 and 2.0 pct, respectively, for all gasoline fuel.
     Only Petron, which is partially owned by government, decided to put up facilities to produce CAA-compliant fuels, while its competitors are importing to comply with the law.
     Petron closed down 0.10 pesos at 3.10 on 6.4 mln shares.
     (1 usd = 55.823 pesos)
     afxmanila@afxasia.com
 

 

Philippine Savings Bank 2003 net profit 403.6 mln pesos, up 33 pct yr/yr


     MANILA (AFX-ASIA) - Philippine Savings Bank (PSBank) said it posted an unaudited net profit of 403.6 mln pesos in 2003, up 33 pct year-on-year, supported by marketing strategies focused on the retail consumer market and aggressive selling.
     PSBank is the thrift unit of Metropolitan Bank & Trust Co, the country's largest bank.
     PSBank said in a statement it expanded its distribution channels in 2003 by increasing the number of branches as well as its sales force.
     The net customer loan portfolio expanded by 3.9 bln pesos or 24.8 pct to 19.6 bln.
     "The bank intensified its efforts to expand market share in its core business of consumer loans, all of which showed substantial loan portfolio increases," PSBank president Pascual Garcia III said.
     Both auto loans and mortgage loans rose by 44 pct, and personal loans by 77 pct.
     It said growth in these portfolios was mainly funded by deposits, which increased by 5.4 bln pesos or 24.4 pct to 27.8 bln pesos.
     The bank's non-performing loans accounted for 5.7 pct of total loans as of end-December, down from 7.8 pct at end-2002. The bank has provided for 61. 2 pct of its NPLs.
     The bank said its capital-to-risk assets ratio stood at 14.6 pct versus the central bank's required minimum of 10 pct.
     PSBank opened seven additional branches in metropolitan Manila and selected provincial areas last year.
     (1 usd = 55.80 pesos)
     edelacruz@afxasia.com
 

 

Manila shares close lower on Wall St fall, Moody's sovereign rate cut


     MANILA (AFX-ASIA) - Share prices closed sharply lower on profit-taking across the board following Wall Street's overnight decline and Moody's Investor Service's downgrade on the Philippines' sovereign credit ratings, dealers said.
     The local bourse traded in step with other markets in the region, which all weakened on concerns over the possible adverse impact of the bird flu virus on Asian economies.
     Ten countries in the region, China being the latest, have confirmed the presence in poultry of the deadly H5N1 strain of the bird flu.
     The 30-company composite index closed down 16.03 points, or 1.02 pct, at 1,548.97 on volume of 176.28 mln shares worth 945.53 mln pesos. It traded between 1,543.67 and 1,561.61 points.
     In the broader market, there were more losers than gainers at 39 to 16, while 36 stocks closed unchanged.
     Dealers said today's decline should enable investors to re-enter the market after the sharp rises in share prices in recent weeks, which saw the benchmark index to hit its highest level in 34 months yesterday.
     Investors are widely expected to adopt a wait-and-see attitude in the next few sessions ahead of the release of 2003 corporate earnings results.
     However, dealers still believe investor sentiment remains generally bullish as select Philippine companies are widely expected to perform better this year in line with a global economic recovery, despite lingering political concerns.
     "The Moody's downgrade, while better than had been expected, still weighed on the market," ATR-Kim Eng Securities research head Andrew Long said.
     Some investors also grabbed the opportunity to cash in on sharp gains made yesterday, he added.
     "The bird flu is increasingly becoming a major concern among investors in the region," Citiseconline.com analyst Mark Alan Canizares said.
     Top-traded Philippine Long Distance Telephone Co was up 5.00 pesos at 945. 00 on 255,460 shares.
     SM Prime shed 0.20 at 6.10 on 18.7 mln shares.
     Globe Telecom was 20.00 lower at 945.00 on 112,660 shares.
     First Holdings fell 0.50 to 23.75 on 2.04 mln shares.
     Meralco A gained 0.50 at 21, while Meralco B fell 0.50 to 33.50.
     Piltel declined 0.06 to 1.60.
     Bank of the Philippine Islands slid 0.50 to 52.00.
     The all-shares index closed up 6.97 at 950.61.
     The commercial-industrial index was down 22.51 at 2,358.49.
     Property was down 11.62 at 578.01 and mining down 25.972 at 1,637.76.
     Oil was unchanged at 1.30 and banking and financial services down 1.53 at 481.41.
     (1 usd = 55.823 pesos)
     cecille.yap`afxasia.com
 

 

OUTLOOK - Philippines San Miguel 2003 net profit seen at 7.0-7.3 bln pesos


     MANILA (AFX-ASIA) - San Miguel Corp's 2003 net profit is expected to come in at a range of 7.0-7.3 bln pesos from 6.6 bln in the previous year, on better sales in the beer and food segments, analysts said.
     For 2004, analysts expect the food and beverage conglomerate to maintain sales growth on the back of increased consumer spending, particularly during the election season.
     San Miguel will hold an investors' briefing tomorrow on its full-year 2003 financial results.
     The group, which controls about 90 pct of the local beer market, normally sees increased sales in the last quarter due to the Christmas and New Year holidays.
     In the nine months to September, San Miguel posted net profit growth of 6 pct year-on-year to 4.84 bln pesos.
     "Having seen SARS weaken beer sales in the first half of last year, San Miguel is likely to have sustained its recovery in the fourth quarter, thanks to holiday spending," said Ron Rodrigo, research consultant at Accord Capital Equities.
     Rodrigo's projection is for San Miguel to report a 2003 net profit of 7.3 bln pesos, in line with a 10-pct growth company president and chief operating officer Ramon Ang predicted.
     "The main driver of sales growth will still be the beer business," he added.
     On Monday, San Miguel liquor unit Ginebra San Miguel Inc (GSMI) reported a 2003 net profit of 1.65 bln pesos, similar to the previous year's level, on the back a 6 pct growth in net sales revenue and consolidated sales volume.
     Last year, GSMI exported a total of 887,000 cases, up 886 pct from 90,000 cases in the previous year.
     Rodrigo sees an improvement in the 2003 revenue of San Miguel's Coca-Cola Beverage Group, which is involved in the sales of Coke and Cosmos soft drinks and bottled water.
     In the eight months to August, Coca-Cola Beverage Group's consolidated sales revenue rose 15 pct year-on-year to 25.9 bln pesos.
     Citiseconline.com analyst Mark Alan Canizares expects San Miguel's 2003 net profit to amount to "at least" 7 bln pesos for San Miguel.
     Regina Capital Development Corp analyst Gomer Tan's forecast for San Miguel's 2003 net profit is also close to 7 bln pesos.
     Looking ahead, Accord Capital's Rodrigo said San Miguel's food business should do well in 2004 after consolidating, although the chicken segment may suffer from the bird flu scare with the virus rapidly spreading across Asia.
     "However, any losses in the poultry business are unlikely to affect San Miguel's consolidated earnings, given that it is just one segment and makes little contribution to overall sales," he said.
     Rodrigo said he is forecasting a 2004 net profit of at least 9 bln pesos for San Miguel, as a result of its continuing expansion to penetrate regional markets on a wider scale.
     He said the group's future profitability will depend largely on the outcome of these expansion efforts.
     San Miguel's expansion is focused on such markets as China, Thailand, Vietnam, Indonesia, Australia, Malaysia and Taiwan.
     It already has beer operations in some of these markets, including China, but San Miguel is looking to set up food and beverage complexes in those countries.
     San Miguel officials earlier said the company will invest 100 mln usd in each of these markets and expect sales there to give a lift of about 300 mln usd to group revenue.
     (1 usd = 55.80 pesos)
     edelacruz@afxasia.com

 

Manila shares slightly lower on profit-taking


     MANILA (AFX-ASIA) - Share prices were slightly lower in late trade on profit-taking in selected blue chips, led by Equitable PCI Bank and SM Prime Holdings, and as investors took a breather after the market's rise to a new 34-month high yesterday.
     Dealers said a one-notch downgrade of the country's sovereign ratings, which led to ratings cuts for several publicly listed firms, may have also weighed on sentiment.
     The local bourse's performance was in line with the across-the-board weakness of other regional markets.
     At 11.13 am, the composite index was down 14.70 points or 0.94 pct at 1, 550.30 on 116.98 mln shares worth 472.1 mln pesos. It has so far traded between 1,550.30 and 1,561.61.
     Decliners outnumbered gainers 25 to 16, with 33 stocks unchanged.
     Interests in Lopez-led stocks, Manila Electric Co and Benpres Holdings Corp, limited the market's decline.
     Moody's lowered the Philippines' sovereign foreign and local currency ratings to Ba2 due to fiscal problems and the political uncertainties the country faces in the run-up to the May elections.
     The downgrade was widely expected in financial markets, but was still better than the initially-feared cut of two notches.
     The market is expected to find support at 1,540 for the rest of the session, dealers said.
     "Other markets in the region are trading weaker. The bird flu, among other things, has been a major concern. We are also tracking Wall Street's performance last night," Citiseconline.com analyst Mark Alan Canizares said.
     Philippine Long Distance Telephone Co was top-traded, up 5.00 pesos at 945 on 138,410 shares.
     SM Prime was down 0.20 at 6.10 on 10.05 mln shares.
     Equitable PCI Bank was down 0.50 at 41.00 on 1.35 mln shares.
     First Philippine Holdings shed 0.50 to 23.75.
     International Container Terminal Services Inc shed 0.05 to 3.40.
     Meralco A was up 0.50 at 21, while Meralco B was unchanged at 34.
     Piltel shed 0.06 to 1.60.
     The all-shares index was up 3.47 at 947.11.
     The commercial-industrial index was down 16.68 at 2,364.32.
     Property was down 10.83 at 578.80, while mining shed 19.82 to 1,643.91.
     Oil was unchanged at 1.30 and banking and financial services down 2.15 at 480.79.
     (1 usd = 55.799 pesos)
     cecille.yap@afxasia.com

 

STOCK ALERT - Philippines' Meralco firmer after court hearing on rate hike


     MANILA (AFX-ASIA) - Manila Electric Co (Meralco) was firmer in mid-trade after the Supreme Court begun hearing yesterday the merits of a 0.12 peso per kilowatthour rate increase provisionally granted to the power distributor, dealers said.
     Meralco A was up 0.50 pesos at 21 on 433,000 shares.
     Meralco B gained 0.50 at 34.50 on 257,200 shares.
     Investors are optimistic that the high court will endorse the Energy Regulatory Commission's (ERC) provisional tariff hike for Meralco on argument that the ERC have acted within the law when it made its decision, they added.
     "At the end of the day, two crucial issues would be clarified before the court. First is on whether the ERC has the right to grant the rate increase, and second whether it did it the right way. Hopefully, the arguments made yesterday should have clarified the issue," ATR-Kim Eng research director Andrew Long said.
     Petitioners against the rate hike opposed the ERC's provisional decision since it was made without public hearings. The regulator however maintained it is entitled to do so under the law.
     The Supreme Court yesterday gave all parties another 20 days to submit their written arguments. It also asked the ERC to submit documents and transcripts of its meetings, including the recommendation of its technical staff on whether the increase was warranted.
     (1 usd = 55.799 pesos)
     cecille.yap@afxasia.com

 

Philippines' RCBC appoints Magsajo president, COO


     MANILA (AFX-ASIA) - Rizal Commercial Banking Corp (RCBC) said its board of directors has elected Francisco Magsajo Jr as president and chief operating officer (COO) effective Feb 1.
     Magsajo's appointment is subject to the central bank's approval, the bank told the stock exchange. The position was previously occupied by Valentin Araneta, who resigned on June 30 last year.
     Magsajo has also been elected regular director of the bank effective Feb 1, replacing and serving the unexpired term of Ambassador Bienvenido Tantoco Sr.
     edelacruz@afxasia.com

 

Philippines Nov manufacturing output volume down 8.0 pct yr-on-yr


     MANILA (AFX-ASIA) - Philippine manufacturing output in November dropped 8. 0 pct year-on-year in volume terms from a revised 5.5 pct decline in October, the National Statistics Office (NSO) said.
     Manufacturing sales fell 0.2 pct by volume after a revised rise of 0.1 pct in October.
     The NSO earlier reported manufacturing output by volume dropped 4.0 pct year-on-year while sales rose 1.1 pct year-on-year in October.
     In value terms, manufacturing output fell 0.4 pct year-on-year in November from a revised rise of 2.9 pct in the previous month, while sales rose 9.0 pct compared with a revised 10.0 pct.
     The National Statistical Coordination Board will release the 2003 GDP data tomorrow, which will include full-year manufacturing figures.
     edelacruz@afxasia.com

 

Philippines' PLDT foreign currency rating raised to Ba2 - Moody's


     (Correcting to show Moody's upgraded rating)
     MANILA (AFX-ASIA) - Moody's Investors Service said it has upgraded Philippine Long Distance Telephone Co's (PLDT) foreign currency senior unsecured debt rating to Ba2 from Ba3.
     PLDT's preferred stock rating was also raised to B1 from B2.
     The outlook for the foreign currency senior unsecured debt rating is negative, in line with Moody's decision to downgrade the Philippine government's long term foreign currency bond rating by one notch to Ba2 with a negative outlook.
     While the foreign currency debt rating outlook is "constrained," Moody's said the rating action "reflects continued improvements in the operating performance of Smart, the company's wholly-owned cellular subsidiary, and the expectation of on-going free cash flow, partly due to dividends from Smart, to help repay debt maturities in the coming years."
     "Furthermore, the ratings reflect PLDT's healthy free cash flow generating ability supported by its stable fixed line business, strong growth at Smart, and lower capital expenditure requirements following the completion of its infrastructure build-out," the agency said.
     PLDT's ratings also reflect its position as a leading integrated telecommunications provider in the Philippines with significant market share and strong EBITDA margins, it said.
     However, the ratings "continue to reflect PLDT's relatively high leverage, d espite a downward trend, exposure to peso-dollar exchange rate movements and vulnerability to adverse political and regulatory development in the Philippines," Moody's said.
     In addition, Moody's said that uncertainty exists surrounding a potential initial public offering of Smart this year and dividend strategies from 2005 onwards.
     "In the next few years, PLDT depends to a certain extent on Smart's dividends to meet scheduled debt service obligations. In this context, Moody's says that its ratings assume either the absence of an IPO in the near term, or alternatively, if there is a partial IPO of its shareholdings, incorporate the expectation that PLDT will use the proceeds to reduce debt," the agency said.
     Similarly, the current rating level assumes the company will have a "sensible dividend strategy" from 2005 onwards and will continue managing its liabilities in the next few years," it said.
     edelacruz@afxasia.com

 

BIRD FLU - Bird flu could cause huge damage if leads to travel scare - ADB


     MANILA (ASIA-AFX) - The avian flu outbreak sweeping across Asia could cause "tens of billions of dollars" of damage if it leads to a major travel scare like the SARS virus last year, the Asian Development Bank said.
     The Manila-based lender offered to help countries combat the growing health and economic threat posed by the virus to the region, where a number of people have been killed when it jumped species from poultry to humans.
     At least initially, the poorest will be hardest hit by the avian flu outbreak -- particularly in rural areas, said Rajat Nag, director-general of ADB's Mekong Department.
     "But if the flu creates a major travel scare as was the case with SARS, tourism and other economic losses could reach tens of billions of dollars," he said in a written statement.
     The World Health Organization, the UN's Food and Agriculture Organization and the World Organization for Animal Health also said the outbreak of bird flu in Asia was a serious global threat for human health, and appealed for international assistance to tackle the virus.
 

 

Philippine CPI seen to remain manageable despite weaker peso - Buenaventura


     MANILA (AFX-ASIA) - Central bank governor Rafael Buenaventura said he expects the country's consumer price index to show a manageable rise of 3.0-3. 5 pct year-on-year in the first two months of the year, compared with 3.1 pct in December, despite a weaker peso.
     "It looks like the inflation rate for the month of January is very much still under control. We started with a low base of 3.1 pct in 2003 so the expectation is we will probably see the inflation rate in the first two months in the range of about 3.0-3.5 pct," he said in an interview on ABS-CBN television.
     "It's gradually inching up obviously because of the election spending, possible higher fuel prices, among other factors. Exchange rate is just one factor."
     The government is targeting inflation of 4-5 pct for this year.
     He said the central bank's policy-making Monetary Board is not expected to take any policy action in the near future despite foreign exchange volatility.
     He said such action would be called for, if the exchange rate is driven by a narrowing of interest rate differentials between the US and the Philippines, and if inflation is accelerating.
     "But looking at it in the near term, at least in the next quarter, it is not evident that that is happening. For the time being the volatility of the peso is more because of political uncertainty," he said.
     "I think what is important is we maintain a more stable peso rather than the level itself. The volatility should subside as the (uncertainties) subside," Buenaventura said.
     However, he admitted that it is difficult to expect exchange rate volatility to ease at this stage.
     "Obviously we still have situations that could come out that could lead to some volatility in the market," he said.
     Currency dealers expect the market to continue pricing in a political risk premium as uncertainties build up in the run-up to the May elections.
     edelacruz@afxasia.com
 

 

Philippine banks' ratings cut in line with sovereign downgrade - Moody's


     MANILA (AFX-ASIA) - Moody's Investors Service lowered the credit ratings of seven Philippine banks, reflecting the rating agency's downgrade of the Philippines' sovereign ratings.
     In a statement, Moody's said the ratings cut on Banco de Oro Universal Bank, Bank of the Philippine Islands, Development Bank of the Philippines, Equitable PCI Bank, Land Bank of the Philippines, Metropolitan Bank & Trust Co and Philippine National Bank was not because of any bank-specific issues.
     A negative outlook on the banks' credit ratings is also in line with that of the sovereign.
     Meanwhile, Moody's said the "unconstrained" Ba3 deposit ratings of Allied Banking Corp, Rizal Commercial Banking and United Coconut Planters Bank are unaffected and have a stable outlook.
     The not-prime short-term deposit ratings and the bank financial strength ratings of all 10 banks were not affected.
     The local currency deposit ratings of Philippine National Bank and Development Bank of the Philippines were downgraded to Ba1 from Baa3.
     "The government's willingness to support the system's major and government-owned banks remains strong. However, the rating agency is concerned that the government's reduced ability to finance deficits, as well as the potential for bureaucratic hurdles, could delay delivery of support to these important institutions," Moody's said.
     The subordinated local currency debt of Philippine National Bank was downgraded to Ba2, one notch below its new local currency deposit rating.
     The foreign currency subordinated debt ratings of Metrobank and Equitable PCI were downgraded to Ba2 from Ba1.
     Banco de Oro and BPI's Ba2 long-term foreign currency deposit ratings were lowered to Ba3, with a negative outlook.
     DBP's Ba2 long-term foreign currency deposit rating was lowered to Ba3. Its Baa3/prime-3 long-term and short-term local currency ratings were lowered to Ba1/not prime. The outlook was negative.
     Equitable PCI's Ba2 long-term foreign currency deposit rating was lowered to Ba3, and is constrained by the country's foreign currency ceiling. Its Ba1 foreign currency subordinated debt rating was also revised to Ba2. The outlooks are negative.
     Landbank's Ba2 long-term foreign currency deposit rating was lowered to Ba3, with a negative outlook.
     Metrobank's Ba2 long-term foreign currency deposit rating was lowered to Ba3, while its Ba1 foreign currency subordinated debt rating was also downgraded to Ba2. The outlooks are negative.
     Philippine National Bank's Ba1 foreign currecny debt and Ba2 long-term deposit ratings were lowered to Ba2 and Ba3, respectively. Its local currency Baa3/prime-3 long-term/short-term deposit and Ba1 subordinated debt ratings were revised to Ba1/not prime and Ba2, respectively. The outlooks were negative.
     Moody's said it also confirmed Banco de Oro's Ba2 long-term foreign currency debt rating, reflecting "the bank's moderate debt servicing capability which is characteristic of institutions with D bank financial strength ratings.
     cecille.yap@afxasia.com
 

 

Philippines must set higher standards for presidential candidates - Ramos


     MANILA (AFX-ASIA) - Former leader Fidel Ramos said higher standards must be set for local presidential candidates to ensure the Philippines does not become the region's laughing stock.
     "I am often asked abroad, 'Are you Filipinos for real? You are again into your elections and you are repeating your sad experience of 1998 all over again?" Ramos, who was president between 1992 and 1998, said in an interview with ABS-CBN television.
     Movie star and college dropout Joseph Estrada won a landslide presidential election victory in 1998, but was toppled in a military-backed popular revolt 30 months later amid a corruption scandal.
     Up to 40 mln Filipinos will go to the polls on May 10 to choose their new president from a field that includes the incumbent, US-educated economist Gloria Arroyo, another high school dropout, cinema icon Fernando Poe, preacher Eddie Villanueva and three other candidates.
     Poe, a political newcomer and friend of Estrada, is seen as a front runner.
     Ramos remarked that, as it stands, more people are eligible to become Philippines president than to enter the lowest ranks of the military and police.
     The 1987 constitution requires only that a president candidate be a natural-born citizen of the Philippines, a registered voter, able to read and write, at least 40 years of age and a resident in the country for 10 years.
     "I'll not mention any names. It's a free country. People are free to choose the president, but I told them, 'I think I can see the irony of your question," Ramos added.
     He said the remedy is to amend the constitution to ensure that whoever is elected Filipino president is "qualified" to perform the responsibilities of the office.
     He said soldiers and policemen once asked him why, unlike presidential candidates, the lowest-ranked private or patrolman must not only be literate, but also must have earned a certain number of units in college and must also undergo physical and written examinations.
     "I told them I have no answer to that," he said.
     Nevertheless, Ramos said he believes Filipino democracy still works, and "there is no need to panic" or to believe rumors that certain quarters are plotting to stop the elections or install a military junta.
 

 

Asia's poor lack access to safe water due to vested interests - experts


     MANILA (AFX-ASIA) - Despite Asia's rising wealth, one in three people in the region lack access to safe drinking water due to vested market interests and faulty policies, experts said here today.
     There is adequate supply, but the poor's lack of access to it is mainly due to "vested interests" denying them such access, while governments neglect them, the experts told an Asian Development Bank-sponsored meeting.
     ADB water resources specialist Wouter Lincklaen Arriens said that, while Asia has made great economic strides in recent decades, one in three people still do not have access to safe drinking water and adequate sanitation.
     Former International Monetary Fund chief Michel Camdessus said the root cause of the problem is the "negligence of mankind and our resignation in the face of inequality."
     "Water is one of the world's worst injustices," said Camdessus, who is now chairman of a special world panel on water infrastructure.
     Charles Andrews, ADB water and sanitation specialist, cited several "suspicious scenarios" to suggest a "conspiracy against the poor" regarding water.
     He said much of Asia's water supply is unaccounted for, leading to low coverage of formal water services and a large informal market that sometimes dwarfed the formal service.
     Arriens said that in cities like Jakarta and Manila, the poor often pay more than the rich because they are not connected to the water system and, instead, have to rely on an "informal market" of water sellers.
     "With such a large informal market, there are vested interests to make sure the water service doesn't improve," Arriens said.
     However, he conceded that "informal providers have a definite role" as many Asian cities have old water systems that will take years to expand.
     Andrews said many water policies seemed "counter-intuitive", such as high connection charges, low tariffs, poor billing and collection services that seemingly ensure that water services will not expand or make money.
     "Politicians often seem to be driving a policy regime of low tariffs," he said, adding that many politicians admit off the record they do this to look good.
     Poor water services often ensure a regime of high subsidies, he said, stressing these policies are "a bad deal for the poor" that often result in cash-strapped utilities and poor services.
     Water utilities should have autonomy because "political interference always damages utility performance", he said.
     He also called for independent regulation and higher pay for utility managers and staff.
 

 

Forex - Philippine peso recovers after Moody's one-notch downgrade - UPDATE


     (Updating with peso closing rate, Arroyo and Amatong statements)
     MANILA (AFX-ASIA) - The peso recovered lost ground against the US dollar to close firmer due to profit-taking immediately after Moody's Investors Service cut Philippines' sovereign ratings by just one notch, dealers said.
     Local financial markets were initially worried about a downgrade of as much as two notches.
     After falling to a new all-time low of 55.920 to the dollar in early trade, the peso bounced back to as high as 55.730 following the Moody's announcement.
     The peso closed at 55.750 to the dollar on volume of 176.5 mln usd, firmer than yesterday's close of 55.850.
     "There's profit-taking after the Moody's announcement and the dollar also looked technically overbought so it's bound to correct," a commercial bank dealer said.
     "At this point, the dollar is expected to find support near 55.750 or even lower."
     Moody's said it lowered to Ba2 its ratings for the Philippine government's foreign currency long-term bonds and notes and local currency long-term obligations.
     Previously, the ratings were Ba1 and Baa3, respectively.
     It said the outlooks for the ratings and ceilings remain negative.
     "Moody's Investors Service has lowered its long-term ratings for the Philippines because of concerns that the government's recent progress in containing fiscal imbalances has not been sufficient to reduce vulnerability to shocks that might be transmitted between the budgetary and external accounts," the agency said in a statement.
     It said another factor that affected the decision is the country's "unsettled political dynamics."
     Finance Secretary Juanita Amatong said Moody's decision is disappointing but not surprising.
     "Moody's is concerned because of the high pitch of political rhetoric but confidence will return once the political season is over," she said in a statement.
     She said the country should weather this "short-term challenge" given the economy's strength and the reforms institutionalized by the government.
     "Government will once again prove that our program of fiscal discipline and reform will move the Philippines forward towards our true potential," Amatong added.
     Currency dealers, however, said pre-election political jitters will continue to undermine the peso.
     President Gloria Arroyo, in a statement, asked her opponents in the upcoming presidential elections to do away with traditional politics and electioneering, as these have been putting too much pressure on the local currency.
     She challenged other presidential candidates to present instead a sound platform of government, echoing the central bank's position that the failure of candidates to present a concrete economic agenda has weighed heavily on the financial market.
     "Market and economic analysts have made it clear that the fate of the peso largely depends on the mode of the campaign and the kind of elections that we will have," Arroyo.
     Dirty elections and politics have resulted in a major setback for the country's economic growth and stability, she added.
     edelacruz@afxasia.com
 

 

Philippines' Arroyo asks opponents to shun politicking to stem peso fall


     MANILA (AFX-ASIA) - President Gloria Arroyo asked her opponents in upcoming presidential elections to do away with traditional politics and electioneering, which have largely been blamed for the peso's fall to its lowest level in history.
     She challenged other presidential candidates to present instead a sound platform of government, echoing the central bank's position that candidates' failure to present a concrete economic agenda has weighed heavily on the financial market.
     The peso early this morning fell to its historic low of 55.92 to the US dollar due to pre-election jitters and as investors awaited the extent of a much-anticipated sovereign ratings downgrade by Moody's Investors Service.
     "Market and economic analysts have made it clear that the fate of the peso largely depends on the mode of the campaign and the kind of elections that we will have," Arroyo said in a statement.
     Dirty elections and politics have brought about a major setback to the country's economic growth and stability, she added.
     (1 usd = 55.83 pesos)
     cecille.yap@afxasia.com
 

 

OUTLOOK- Philippines Globe Telecom 2003 net profit seen at 8.5-11.1 bln pesos


     ---- by Enrico de la Cruz ----
     MANILA (AFX-ASIA) - Globe Telecom Inc is expected to report later this week full-year 2003 net profit ranging from 8.5 bln to 11.1 bln pesos, up from 6.8 bln in the previous year, on sustained robust gains in the wireless business, analysts said.
     The outlook for 2004 is even better, with the expected pick-up in consumer spending during the election season seen boosting Globe's earnings. But most analysts said they are still reviewing their numbers.
     Globe is to hold an investors' briefing on Friday (Jan 30) on its 2003 results.
     Globe, which is substantially owned by Philippine conglomerate Ayala Corp and Singapore Telecom, booked a 70 pct year-on-year surge in net profit to 7. 5 bln pesos in the nine months to September, after recording its highest-ever quarterly wireless subscriber take-up in the third quarter.
     The figure took into account provisions made in the first half of the year.
     Net profit before provisions stood at 8.4 bln pesos in the nine-month period, up 91 pct from a year earlier.
     "The fourth quarter is normally better than any other period of the year for telecom companies, particularly for their wireless business. Spending on the pre-paid service is higher during Christmas and New Year holidays," said James Lago, research head at Westlink Global Equities.
     Lago said Globe's own cheap pre-paid re-load service has also helped sustain gains in the wireless business, while its wireless subscriber base continued to expand at the same time.
     Globe, which has been dominating the post-paid wireless business for years, is expected to have widened its pre-paid wireless base in the fourth quarter of 2003, said Accord Capital Equities research consultant Ron Rodrigo.
     He said Globe may have added around 400,000 new subscribers in the last quarter of 2003, bringing its total number of subscribers to around 8.5 mln from 8.1 mln as of end-September.
     Rodrigo expects Globe's 2003 net profit to come in at 8.8-9.0 bln pesos.
     Globe and rival Smart Communications Inc, a unit of Philippine Long Distance Telephone Co, recently announced lower wireless call rates, a move that indicates competition is heating up, he said.
     "It may also mean that subscriber take-up is also slowing down," he said.
     But he said a surge in the volume of SMS text messages and calls is expected during the election season, and this may help offset any slowdown in subscriber take-up.
     The latest promotional gimmick from Globe is the "Share-a-Load" scheme, which allows subscribers to share their "loads" by using the spare capacity of fellow Globe subscribers.
     It is Globe's answer to Smart's "Pasa Load".
     Rodrigo said this scheme should help boost revenues, along with the telecom firms' aggressive move to penetrate unserved and underserved rural areas.
     Roberto Cano, an analyst with BPI Securities, is more bullish as he is forecasting Globe's 2003 net profit to have surged to 11.1 bln pesos.
     "We're assuming that it had sustained the kind of growth it posted in the third quarter," he said.
     (1 usd = 55.80 pesos)
     edelacruz@afxasia.com
 

 

Philippines 'will defer borrowing' after Moody's sovereign ratings cut - Edeza


     MANILA (AFX-ASIA) - National Treasurer Sergio Edeza said the government is to defer tapping the international bond market following Moody's Investor Services ratings downgrade on the country's sovereign debt ratings.
     "We will defer borrowing until the market settles down," Edeza told reporters.
     The government was reportedly preparing to borrow 200 mln usd to refinance debts maturing in February, until the Moody's decision was made.
     Moody's has lowered to Ba2 its ratings for the Philippine government's foreign currency long-term bonds and notes and local currency long-term obligations due to fiscal and political concerns.
     Previously, the ratings were Ba1 and Baa3, respectively.
     The outlooks for the ratings and ceilings remain negative.
     Moody's said government's "recent progress in containing fiscal imbalances has not been sufficient to reduce vulnerability to shocks that might be transmitted between the budgetary and external accounts."
     "Unsettled political dynamics" related to the upcoming May general elections also led to the ratings cut, it said.
     (1 usd = 55.83 pesos)
     afxmanila@afxasia.com
 

 

Philippines' PLDT declares cash dividends on preferred shares


     MANILA (AFX-ASIA) - The Philippine Long Distance Telephone Co said its board of directors approved the following cash dividends:
     - a total of 12.28 mln pesos on all of the company's series IV cumulative non-convertible redeemable preferred stock, to be paid on March 15 to holders on record as of Feb 17;
     - 1.00 peso per outstanding share of Series DD 10 pct cumulative convertible preferred stocks for the annual period ending Jan 31, 2004, to be paid on Feb 27 to holders on record as of Feb 12;
     - 1.00 peso per outstanding shares of Series CC 10 pct cumulative convertible preferred stock for the annual period ending Feb 28, to be paid on March 31 to holders on record as of Feb 25;
     The board of directors also constituted 1.0 mln shares of serial preferred stocks into Series EE 10 pct cumulative convertible preferred stock, the company said in a disclosure to the exchange.
     (1 usd = 55.83 pesos)
     cecille.yap@afxasia.com
 

 

Philippines' Napocor long-term debt rating cut to Ba2 - Moody's


     MANILA (AFX-ASIA) - Moody's Investors Service said it cut the long-term debt rating of state-owned National Power Corp (Napocor) to Ba2 from Ba1 following the rating agency's downgrade of the country's sovereign ratings.
     The rating outlook on the country's principal generation and sole transmission company is negative, Moody's said in a statement.
     "Napocor's Ba2 rating reflects the Philippine government's unconditional and irrevocable guarantee for the company's rated senior unsecured bonds," Moody's said.
     Today the international ratings agency cut the Philippine government's long-term foreign currency bond rating to Ba2 from Ba1 due to fiscal and political concerns.
     afxmanila@afxasia.com
 

 

Manila shares close at 34-month high on interest in blue chips


     MANILA (AFX-ASIA) - Share prices closed higher, with the main index ending at its highest level in 34 months, on accumulation in select blue chips, dealers said.
     Buying interest was further fuelled by a better-than-expected sovereign ratings downgrade from Moody's Investors Service.
     The 30-company composite index closed up 17.30 points, or 1.12 pct, at 1, 565.00 on 240.76 mln shares worth 1.08 bln pesos. It traded between 1,547.27 and 1,567.15.
     It was the index's highest close since March 12, 2001 when it ended at 1, 567.53.
     In the broader market, gainers slightly outnumbered losers 25 to 23, with 46 stocks unchanged.
     Dealers said blue chips with strong earnings outlooks for the year continue to generate interest even as most of them have already reached overbought levels.
     Moody's lowered to Ba2 its ratings for the Philippine government's foreign currency long-term bonds and notes and local currency long-term obligations due to lingering fiscal and political concerns.
     The outlooks for the ratings and ceilings remain negative.
     The international ratings agency said the government's recent progress in containing fiscal imbalances has not been sufficient, while the country's "unsettled political dynamics" ahead of the May general elections is another reason for the cut.
     However, investors in the equities and foreign exchange markets welcomed the Moody's one-notch downgrade as they initially feared a two-notch cut.
     Sluggish equities trading early in the morning turned more aggressive as reflected in the high value turnover, while the peso recovered from an all-time low of 55.92 to the US dollar which it reached prior to the Moody's announcement.
     Dealers said the market continues to consolidate and is likely to trade between 1,550 and 1,580 in the next few days.
     First Grade Holdings managing director Astro del Castillo said the market had already discounted Moody's decision long before it was actually released and therefore it failed to negatively affect the consolidation trend.
     "It would have been a different story had we been lowered by two steps," del Castillo said.
     AB Capital Securities research director Jose Vistan Jr, however, said Moody's negative outlook suggests the Philippines remain susceptible to another downgrade.
     He added Philippine companies with positive earnings outlooks remain good buys, offsetting concerns on the political and economic fronts.
     "Investors in general are looking on individual stories rather than the macroeconomic outlook. Companies expected to do well despite economic difficulties will continue to generate interest," Vistan said.
     SM Prime was top-traded, unchanged at 6.30 on 39.35 mln shares.
     Second most active Philippine Long Distance Telephone Co ended steady at 940 on 156,320 shares.
     Globe Telecom was also unchanged at 965 on 142,400 shares.
     Bank of the Philippine Islands gained 2.00 pesos to 52.50 on 2.0 mln shares.
     Ayala Land gained 0.20 to 6.40 on 11.42 mln shares, while parent Ayala Corp rose 0.30 to 6.50 on 7.7 mln shares.
     Meralco B, open to foreigners, ended unchanged at 34, reversing earlier losses. Meralco A was down 0.50 at 20.50.
     Piltel gained 0.12 at 1.66.
     The all-shares index closed up 9.78 points at 943.64.
     The commercial-industrial index was up 202.23 at 2,381.00.
     Property was up 8.65 at 589.63, while mining was down 30.39 at 1,663.73.
     Oil was unchanged at 1.30 and banking and financial services up 7.38 at 482.94.
     (1 usd = 55.83 pesos)
     cecille.yap@afxasia.com

 

Outlook for Asia-Pacific sovereign ratings generally stable in 2004 - S&P


     MANILA (AFX-ASIA) - Standard & Poor's Ratings Services said the sovereign credit quality in the Asia-Pacific region is generally expected to be stable in 2004 on the back of relatively favorable global and regional macroeconomic conditions.
     However, it said improvements in sovereign credit ratings may still occur, based on country-specific factors.
     The agency said it has prepared a report, entitled "Asia-Pacific Sovereign Report Card," which provides updates on credit developments in each of the 18 rated sovereigns in the region.
     Key elections will be held this year in Australia, Japan, Taiwan, Korea, Malaysia, Mongolia, the Philippines, India, Indonesia and, possibly, Thailand --the processes and results of which may be important for economic and political stability in various sovereigns, S&P noted.
     However, some elections are not expected to affect economic policies in some cases significantly, it said.
     "Taiwan's presidential election, for example, is important as ties with mainland China could be affected significantly by the outcome, which, in turn, affects Taiwan's geopolitical risks and economic prospects," said S&P credit analyst Takahira Ogawa, director in the Asia-Pacific Sovereign & Public Finance Ratings Group.
     S&P said the credit quality of sovereigns in the Asia-Pacific region will hinge on government policies on fiscal adjustment and structural reforms, which will affect their growth prospects, in turn, directly and indirectly affecting the governments' future fiscal positions.
     Of the 18 sovereigns S&P rates in the region, five -- Australia, Malaysia, Thailand, the Cook Islands, and Indonesia - were upgraded in 2003, 11 were affirmed and only the Philippines and Papua New Guinea were downgraded, a spread more favorable than the global picture.
     edelacruz@afxasia.com

 

ROUNDUP - Moody's downgrades Philippine ratings on fiscal, political concerns


     MANILA (AFX-ASIA) - Moody's Investors Service announced today that it has lowered the Philippines' sovereign foreign and local currency ratings to Ba2 due to the fiscal problems and political uncertainties the country faces in the run-up to the May elections.
     The downgrade was widely expected in financial markets, but better than the initially feared cut of as much as two notches.
     After falling to an all-time low of 55.920 against the US dollar in early trade today on concerns that Moody's would implement a two-notch downgrade of the ratings, the peso recovered to bounced back to below the 55.800 level after the agency's announcement.
     At 11.46 am, the peso averaged 55.830 to the dollar on volume of 115.5 mln usd. It closed at 55.850 yesterday.
     The composite index was up 14.42 points, or 0.93 pct, at 1,562.12 on volume of 180.76 mln shares worth 789.46 mln pesos.
     "There has been profit-taking after the Moody's announcement and, as the dollar also looked technically overbought, it was bound to correct," said a currency dealer at commercial bank.
     "At this point, the dollar is expected to find support near 55.750 or even lower."
     Moody's said it cut to Ba2 its ratings for the Philippine government's foreign currency long-term bonds and notes from Ba1 and local currency long-term obligations from Baa3.
     It added that the outlooks for the ratings and ceilings remain negative.
     "Moody's Investors Service has lowered its long-term ratings for the Philippines because of concerns that the government's recent progress in containing fiscal imbalances has not been sufficient to reduce vulnerability to shocks that might be transmitted between the budgetary and external accounts," the agency said in a statement.
     It said the country's "unsettled political dynamics" also affected the ratings decision.
     Central bank deputy governor Amando Tetangco called Moody's ratings move "disappointing."
     "We should have preferred a better grade, but this should not deter us from continuing to pursue policies to improve our performance," he said.
     Jose Vistan Jr, research director at AB Capital Securities, said the negative rating outlooks from Moody's serve as a warning for a possible further downgrade in the future.
     "We should not lose our guard. The negative outlook is sending a signal that we're still susceptible to a further downgrade. It is as if Moody's is saying it could have been two notches, but we gave you one for now," he said.
     Moody's noted that the country's political environment has become more uncertain with the approach of May's presidential election.
     Currency dealers are not ruling out the possibility that the peso will test record lows in the coming days as the market prices in a political risk premium.
     They said the market is particularly worried about another movie actor, who is also inexperienced in government service and politics, becoming the next president of the Philippines.
     The Commission on Elections (Comelec) has ruled front-runner Fernando Poe Jr as being eligible to contest the May polls against President Gloria Arroyo and four other candidates.
     Comelec dismissed last week a disqualification petition against Poe, which a Manila lawyer filed on the ground that he is not a natural-born Filipino citizen.
     Central bank governor Rafael Buenaventura said pre-election jitters, particularly the failure of presidential candidates to present clear and concrete economic platforms, continue to weigh on the peso.
     Moody's, on the other hand, said the winning presidential candidate "will need to implement more vigorous policies than recent administrations have been able to pursue to ensure the long-run stability of the country's finances."
     afxmanila@afxasia.com

 

BIRD FLU-WHO warns poultry culls must be carried out with protective equipment


     MANILA (AFX-ASIA) - The World Health Organization (WHO) today warned people carrying out poultry culls in view of an avian influenza epidemic in Asia, to don protective equipment or risk contracting the deadly virus.
     The outbreak has swept through nearly a dozen Asian countries and killed a several people in Thailand and Vietnam, forcing governments to order the mass slaughter of millions of chickens in infected areas.
     "Cullers and transporters should be provided with appropriate personal protective equipment" in the form of protective clothing including coveralls, impermeable aprons or surgical gowns with long cuffed sleeves, the WHO Western Pacific office here said.
     They should also wear goggles, rubber or polyurethane boots or protective foot covers, "heavy duty rubber work gloves that may be disinfected" as well as respirator masks, with standard well-fitted surgical masks as substitute if N95-type respirators are not available.
     The WHO said exposure to infected poultry and their faeces, or dust or soil contaminated with faeces, could result in human infection.
     "All persons who have been in close contact with the infected animals should wash their hands frequently. Cullers and transporters should disinfect their hands after the operation," it said.
     Environmental clean-up should be carried out in areas of culling, using the same protective measures, it added.

 

Philippines' Globe says US FCC lifts stop-payment order on AT&T, MCI, Sprint


     MANILA (AFX-ASIA) - The US Federal Communications Commission (FCC) has lifted an early 2003 order prohibiting US carriers from paying Globe Telecom Inc for processed inbound calls from the United States.
     Globe, in a disclosure to the stock exchange, said it received today a copy of the FCC's Jan 26 ruling lifting the stop-payment order.
     "The FCC's order follows Globe's conclusion of commercial arrangements with US carriers AT&T, MCI and Sprint which normalized the relationship between the parties," Globe said.
     US carriers are now required to settle their payables with the Philippine firm following the decision.
     The FCC, in early 2003, prevented US carriers from settling obligations with their Philippine counterparts on claims that the latter were blocking calls from US carriers to force them to pay higher termination rates. cecille.yap@afxasia.com cey/swp

 

Philippine ratings cut on fiscal/political concerns, says Moody's

     
     MANILA (AFX-ASIA) - Moody's Investors Service said it has lowered to Ba2 its ratings for the Philippine government's foreign currency long-term bonds and notes and local currency long-term obligations.
     Previously, the ratings were at Ba1 and Baa3, respectively.
     It added that the outlooks for the ratings and ceilings remain negative.
     "Moody's Investors Service has lowered its long-term ratings for the Philippines because of concerns that the government's recent progress in containing fiscal imbalances has not been sufficient to reduce vulnerability to shocks that might be transmitted between the budgetary and external accounts," the agency said in a statement.
     It said another factor affecting the rating decision is the country's "unsettled political dynamics."
     The rating cut was, however, milder than expected as local financial markets initially feared the downgrade would be deeper.
     Moody's said the foreign currency bank deposit ceiling was also lowered to Ba3 from Ba2.
     "Filipino politics has become more uncertain with the approach of May's presidential election. The winning candidate will need to implement more vigorous policies than recent administrations have been able to pursue to ensure the long-run stability of the country's finances," Moody's said.
     While the agency recognizes that administrative actions in the past year have bolstered revenue performance, Moody's noted that the national government budget deficit for 2003 is well above the level originally envisaged in 2002, pushing back the date to achieve fiscal consolidation.
     Finance Secretary Juanita Amatong earlier said, citing preliminary figures, that the country registered a 2003 budget deficit of 198.7 bln pesos, lower than the 202-bln pesos ceiling that the government had set for the year.
     The government is aiming for a balanced budget by 2009.
     Moody's also noted that public-sector debt ratios remain at relatively high levels, and the ratio of revenues to GDP also remains well below the peak reached back in 1997.
     "In Moody's opinion, last year's improvement in revenue performance will need to be intensified under the next administration to ensure lasting improvement in public sector finances," it said.
     The agency also warned that the country's key balance of payments trends have deteriorated even as the authorities managed last year to maintain official foreign exchange reserves at a level that provides adequate insulation from transitory shocks.
     The country's export performance also worried the agency.
     "The Philippines' previously robust export performance has apparently faltered, a development that is probably linked to declining foreign equity investment inflows," Moody's said.
     It said the surprisingly low export growth in 2003 may be due in part to incomplete reporting among agencies and that export performance may have actually been somewhat stronger.
     "Nevertheless, slippage in the competitiveness of the Philippines in recent years raises concerns that, absent an improvement in confidence, other pressures could intensify on the balance of payments and erode the external payments position," the agency said.
     Moody's, however, said it continues to recognize that the Philippines has strengths that support the ratings such as an independent central bank that has effectively managed monetary policy to achieve historically low inflation rates, and a flexible exchange rate that has helped to preserve official foreign exchange reserves.
     The country's well-educated and disciplined labor force has also helped maintain the presence of numerous export-oriented companies in the Philippines, and these are competitive providers of goods and services, the agency said.
     On the other hand, it said that Filipinos working abroad are moving into higher skilled occupations and continue to send a substantial and growing amount of income back home, adding stability to the balance of payments while boosting domestic consumption and, increasingly, investment.
     afxmanila@afxasia.com

 

Philippine peso aided by better-than-expected Moody's news- Buenaventura


     MANILA (AFX-ASIA) - The peso's recovery versus the US dollar in mid-morning trade was partly aided by Moody's Investors Service's better-than-expected sovereign ratings downgrade, central bank governor Rafael Buenaventura said.
     The local currency fell to a new all-time low of 55.920 to the dollar in early trade, but bounced back to 55.78 to the dollar immediately after the Moody's announcement.
     The market was said to be anticipating a worse, two-notch ratings cut from the international ratings agency.
     Buenaventura said the central bank does not plan to intervene in the spot market, although he said the regulator was closely "watching and waiting" for developments.
     "We're seeing the market improve, unless we have another surprise... There's no plan to intervene. We're OK for now," Buenaventura said.
     He added pre-election jitters, particularly the failure of presidential candidates to present clear and concrete economic platforms, continue to weigh heavily on the market.
     Dealers said profit-taking on the dollar emerged after the Moody's announcement and as the US unit reached an overbought level.
     Moody's said it lowered to Ba2 its ratings for the Philippine government's foreign currency long-term bonds and notes and local currency long-term obligations due to fiscal and political concerns.
     Previously, the ratings were at Ba1 and Baa3, respectively.
     It said the outlooks for the ratings and ceilings remain negative.
     Moody's noted the government's recent progress in containing fiscal imbalances has not been sufficient to reduce vulnerability to shocks that might be transmitted between the budgetary and external accounts.
     It said another factor that affected the rating decision is the country's "unsettled political dynamics."
     cecille.yap@afxasia.com

 

Manila shares firmer mid-trade after better-than-expected Moody's ratings cut


     MANILA (AFX-ASIA) - Share prices were higher mid-trade as investors took heart from Moody's Investors Service's one-notch downgrade of the Philippines' sovereign ratings, which, dealers said, was better than had been expected.
     They added companies with positive earnings outlook, regardless of the economy's performance moving forward, continue to generate investor interest, even though most blue chips have reached overbought levels.
     At 10.32 am, the 30-company composite index was up 11.75 points, or 0.76 pct, at 1,559.45 on volume of 102.6 mln shares worth 472.8 mln pesos. It has so far traded between 1,547.27 and 1,560.07.
     In the broader market, gainers outnumbered losers 21 to nine, while 28 stocks were unchanged.
     The market is seen trading at a range of 1,550-1,580 points for the rest of the session.
     Moody's Investors Service lowered to Ba2 its ratings for the Philippine government's foreign currency long-term bonds and notes and local currency long-term obligations.
     Previously, the ratings were at Ba1 and Baa3, respectively.
     It said the outlooks for the ratings and ceilings remain negative.
     The progress the Philippines has made of late in containing its fiscal imbalances has not been enough to reduce vulnerability to shocks, Moody's said, adding that "unsettled political dynamics" ahead of the May general elections is another factor that has led to the downgrade.
     (1 usd = 55.856 pesos)
     cecille.yap@afxasia.com

 

Forex - Philippine peso recovers after Moody's one-notch downgrade


     MANILA (AFX-ASIA) - The peso recovered lost ground against the US dollar on profit-taking immediately after Moody's Investors Service cut Philippines' sovereign ratings by just one notch, dealers said.
     After falling to a new all-time low of 55.920 to the dollar in early trade, the peso bounced back and hit 55.780 after the Moody's announcement.
     At 10.24 am, the peso averaged 55.856 to the dollar on volume of 76.0 mln usd. It closed at 55.850 yesterday.
     "There's profit-taking after the Moody's announcement and the dollar also looked technically overbought so it's bound to correct," a commercial bank dealer said.
     "At this point, the dollar is expected to find support near 55.750 or even lower."
     Moody's said it lowered to "Ba2" its ratings for the Philippine government's foreign currency long-term bonds and notes and local currency long-term obligations.
     Previously, the ratings were at "Ba1" and "Baa3," respectively.
     It said the outlooks for the ratings and ceilings remain negative.
     "Moody's Investors Service has lowered its long-term ratings for the Philippines because of concerns that the government's recent progress in containing fiscal imbalances has not been sufficient to reduce vulnerability to shocks that might be transmitted between the budgetary and external accounts," the agency said in a statement.
     It said another factor that affected the decision is the country's "unsettled political dynamics."
     Currency dealers said pre-election political jitters will continue to undermine the peso.
     edelacruz@afxasia.com

 

STOCK ALERT - Singapore-listed Medtecs higher on bird flu outbreak


     SINGAPORE (AFX-ASIA) - Philippine-based laboratory gown and surgical masks supplier Medtecs International Corp was higher in early morning trade as the spate of bird flu outbreaks in the region boosted demand for its products, dealers said.
     Medtecs was up 0.005 sgd or 2.08 pct at 0.245 on volume of 714,000 shares.
     Several countries in Asia have reported human cases of bird flu and troubles with their poultry sector. Six people have died in Vietnam of the bird flu virus while Thailand yesterday confirmed one fatality and another five deaths from suspected cases.
     More than 20 mln chickens have been slaughtered in Asia to counter the bird flu outbreak, which has been reported in Thailand, Pakistan, South Korea, Laos, Cambodia, Indonesia, Japan and Vietnam and Taiwan.
     (1 usd = 1.69 sgd)
     rosana.gulzar@afxasia.com

 

STOCK ALERT - Philippines' Meralco lower on ERC rate cut order


     MANILA (AFX-ASIA) - Manila Electric Co (Meralco) was lower in early trade after the Energy Regulatory Commission (ERC) ordered the country's largest power distributor to reduce its rates by 0.2149 pesos per kilowatthour, dealers said.
     Meralco B, available to foreigners, was down 0.50 peso at 33.50 on 404, 300 shares.
     Meralco A was down 1.00 at 20 on 253,300 shares.
     The rate cut order, which will take effect next month and benefit Meralco's 4 mln customers, was based on the generation rate adjustment applied for by the company earlier.
     The generation rate adjustment mechanism (GRAM) allows utilities to recover fuel costs and foreign exchange adjustments once every three months.
     Prior to the ERC order, the Supreme Court also asked Meralco to suspend a 0.12-peso per kWh distribution rate increase implemented from Jan 1. The rate hike would have boosted its annual revenue by 1.9 bln pesos.
     Dealers said the rate reduction coupled with its inability to implement the provisional tariff increase would effectively limit Meralco's cash flow and hinder its ability to pay down maturing debts.
     Meralco is undergoing a 30.5-bln peso refund of overcharges to customers.
     (1 usd = 55.875 pesos)
     cecille.yap@afxasia.com

 

Philippines' Music seeks indefinite suspension on equity restructuring


     MANILA (AFX-ASIA) - Music Corp has requested that trading in its shares be suspended indefinitely effective today, the Philippine Stock Exchange said.
     The semiconductor firm said the suspension was requested to avoid any trading confusion arising from the company's planned equity restructuring and reorganization, which the Securities and Exchange Commission is expected to approve this week.
     Music shareholders recently approved a change in the company's name to Music Semiconductors Corp and a plan to raise between 60 mln and 90 mln pesos through a new share issue.
     Music aims to eliminate completely its capital deficiency and to record a capital surplus come mid-2004 in order to avoid being de-listed from the PSE.
     (1 usd = 55.85 pesos)
     cecille.yap@afxasia.com

 

Philippines' RCBC to invest extra 43.3 mln pesos in Pilipinas Shell


     MANILA (AFX-ASIA) - Rizal Commercial Banking Corp said its board of directors has approved to increase its investments in Pilipinas Shell Petroleum Corp, the country's second largest oil company.
     In a disclosure, RCBC said it will buy an additional 1.35 mln common shares of the oil firm for a total purchase price of 43.3 mln pesos. The bank did not say how much of Pilipinas Shell it already owns.
     RCBC's board of directors also approved an additional equity infusion of 250 mln pesos in RCBC Capital Corp, and a staggered purchase of RCBC Capital's remaining outstanding 42,602 shares to make it a 100 pct wholly-owned subsidiary of the bank.
     No other details were provided.
     (1 usd = 55.89 pesos)
     cecille.yap@afxasia.com

 

Philippine Fil-Hispano suspension lifted today - PSE


     MANILA (AFX-ASIA) - The trading suspension imposed on Fil-Hispano Holdings Corp will be lifted today, the Philippine Stock Exchange said.
     The order came after the company submitted additional information on its plan to acquire the local call center business of All Asia Customer Service Holdings Ltd in exchange for the latter's controlling interest in the former.
     ACSH is a limited liability company set up in Hong Kong. Wholly-owned and Philippine-registered unit All Asia Customer Service Inc (ACSI) operates its call center business.
     cecille.yap@afxasia.com

 

Federation of Philippine Industries opposes DST increase on debt papers


     MANILA (AFX-ASIA) - The Federation of Philippine Industries (FPI) has opposed a pending legislative measure seeking to increase the documentary stamp tax (DST) on longer-term debt instruments, saying the proposal would effectively increase the cost of doing business in the country.
     The business group has particularly opposed a provision of the pending bill which effectively reduces the DST on debt papers with maturity of less than 110 days, but increases by 233 pct the DST on debt papers with maturity beyond 110 days.
     "The increase in DST on long-term debts by 233 pct is disadvantageous to companies that have long-term investments in expanding or modernizing their plant facilities and/or in setting up a new business," the group said.
     FPI said manufacturers usually have revolving and standby letters of credits, which are renewed annually, where DST is imposed. Also, there are letters of credit for capital equipment importation which have a maturity of more than 110 days.
     Should the measure be passed, a loan or credit facility of 10 mln pesos a year will pay a DST of 50,000 pesos instead of 15,000 under existing laws.
     Even if the loan has a pre-termination condition, the amount of DST to be charged will also cover a one-year period.
     "The manufacturing industry has long been put at a great disadvantage with the high cost of labor, electricity, interest, etcm rendering them uncompetitive . Now, a higher DST is added," FPI said.
     The group said the government should improve tax collection efficiency rather than increase taxes.
     (1 usd = 55.85 pesos)
     cecille.yap@afxasia.com

 


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