NEWS

Philippine stock exchange rejects call to suspend private placement deals

     MANILA (AFX-ASIA) - The Philippine Stock Exchange's board of directors has rejected a request by some shareholders that it reconsiders the sale of the local bourse's 40 pct stake to institutional buyers.
     "The board unanimously denied all the requests of some shareholders, including the unwinding of the private placement," PSE president Cayetano Paderanga said, adding the decision was arrived at after consultating the exchange's external general counsels.
     Last month, the PSE sold 5.265 mln shares to the Government Service Insurance System, Philippine Long Distance Telephone Co Beneficial Trust Fund, San Miguel Retirement Fund, Kim Eng Investment Ltd., KE Strategic Pte. Ltd., A. Soriano Corporation and Equinox Partners.
     The shares, representing a 40 pct stake, were sold at 119.50 pesos apiece versus the then market price of 195.
     Protesting shareholders have taken PSE officials to court.
     A regional trial court in Pasig City has served summons on PSE officials, informing them of next week's court hearings on the private placement.
     However, PSE director and lawyer Francis Ed Lim said new investors would be allowed to attend and vote their shares in tomorrow's PSE election in the absence of a temporary restraining order from the court.
     Protesting shareholders led by Ismael G. Cruz of IGC Securities, Filomeno Francisco of AB Capital Securities and Edgardo Guevarra of Intra-Invest Securiti es Inc want the shares sale suspended and the new investors prevented from voting.
     They claim the sale was disadvantageous to existing shareholders as the shares were purchased at a much lower price, and that the transaction violated the PSE rule that provides that a sale of up to 15 pct of the exchange's total assets should require two-thirds approval of shareholders.
     The Securities and Exchange Commission has mandated the PSE to sell shares either through private placement or public offering in order to comply with the ownership limitation provided under the Securities Regulation Code (SRC).
     Under the SRC, no single industry should own more than 20 pct of the exchange's outstanding shares. Prior to the sale, the PSE was nearly 100 pct owned by the stockbrokers.
     Stockbrokers' shareholdings were reduced to 60 pct after the private placement.
     PSE shares closed flat at 150 on 610 shares.
     (1 usd = 56.30 pesos)
     cecille.yap@afxasia.com

Philippines to host Interpol conference on counter-terrorism - officials

     MANILA (AFX-ASIA) - Interpol will hold two regional conferences in the Philippines next week on counter-terrorism and other anti-crime measures, likely covering the recent bomb blasts in Madrid, officials said today.
     At least 121 delegates from 63 countries, including the US, China, Japan, Spain, most Southeast Asian countries and even a delegate from Iraq will attend the Interpol-Asian Regional Conference on March 16-17, said spokesmen for the international police agency and hosts the Philippines police.
     Many of the same delegates will then attend the Project Pacific Interpol Working Meeting on March 18-19.
     The first conference will deal with Interpol projects, including counter-terrorism, but also on international Interpol databases covering DNA, fingerprinting, stolen motor vehicles, lost travel documents, child pornography and abuse, fugitive tracking, illegal drugs and criminal organizations.
     The spokesmen said it is likely delegates will be briefed on Thursday's bomb blasts in the Spanish capital that claimed almost 200 lives.
     The second conference will deal with creating a specific forum for counter-terrorism, including an "exchange of information to identify probable personalities who are working in the Asia-Pacific region," a senior Interpol official said.
     This will include forging plans to "target... terrorist-enabling infrastructures," a document from the conference said.
     "After what happened in Madrid, the need for international police cooperation is even stronger," the Interpol official said, even though the meetings were scheduled before the bombings in Madrid.
     The officials did not identify the prospective terrorist groups targeted.
     The conferences will allow the Interpol leadership, based in France, to meet with police officials from the Asian region, the spokesmen added.

Philippine PLDT says wireless units can handle 16 mln subscribers by April

     MANILA (AFX-ASIA) - Philippine Long Distance Telephone Co said its wireless unit Smart Communications Inc and affiliate Pilipino Telephone Co will be able to handle 16 mln subscribers by April.
     PLDT's wireless subscribers have already reached more than 13 mln in February and the figure is seen growing to 18 mln by the end of the year.
     "We can handle 150 mln text messages in a day and roughly we will be having more network capacity of about, by the end of next month, 16 million subscribers," PLDT and Smart president Napoleon Nazareno said.
     Smart accounts for 45 pct of the cellular market, while Piltel's Talk N' Text brand has a 13 pct share.
     PLDT's wireless subscribers could hit 14 mln by the end of the first quarter, officials said.
     Smart has been asking for additional access codes from the National Telecommunications Commission in anticipation of a continued surge in subscriber growth.
     "Our network is already scalable. It is in a mature stage and is already in such a robust nature that it can expand when demand increases," Nazareno said.
     afxmanila@afxasia.com

Lafayette (Philippines) to start mining ops at Rapu Rapu site Q4 - trade dept

     MANILA (AFX-ASIA) - Australian firm Lafayette Mining Ltd unit Lafayette (Philippines) will begin mining operations at the Rapu Rapu mining site in the Bicol region in the fourth quarter, the Department of Trade and Industry (DTI) said.
     The site is expected to produce copper, gold, silver and zinc valued at 350 mln usd over a six-year period, it said.
     Trade Secretary Cesar Purisima said output from Rapu Rapu will help boost the country's metal exports, adding that a consortium of banks has approved a 35 mln usd loan to Lafayette to develop the mining site.
     It will be the first mine in the Philippines to be developed in more than 20 years, he said.
     Lafayette has secured regulatory approvals for the project, which will involve 230 hectares of land on Rapu Rapu island.
     Rapu Rapu may produce some 10,000 tons of copper concentrates a year; 14, 000 tons of zinc concentrates; 50,000 ounces of gold and 600,000 ounces of silver, the DTI said, citing feasibility studies.
     "Exploration is underway to define additional reserves," the DTI said, adding Lafayette expects capital expenditure for the project will be less than 41 mln usd.
     Purisima said he hopes the Rapu Rapu project will revive the industry, noting that mining investments have a multiplier effect on the economy.
     "It brings with it community development as jobs are created, new small businesses are opened and other support establishments are installed in the locality," he said.
     The local mining industry's output represented 1.4 pct of GDP in 2002.
     (1 usd = 56.27 pesos)
     edelacruz@afxasia.com

Philippines Feb motor vehicle sales down 18.66 pct yr-on-yr

     MANILA (AFX-ASIA) - Motor vehicle sales fell for the second consecutive month in February, declining 18.66 pct year-on-year to 6,584 units, the Chamber of Automotive Manufacturers of the Philippines and the Truck Manufacturers Association said.
     January sales fell at an annualized rate of 5.3 pct to 6,518 units, the two groups reported earlier.
     The extended fall was attributed to price hikes due to higher excise taxes and the peso's weakness against the US dollar.
     Commercial vehicle sales, which account for 60 pct of the overall figure, dropped to 3,981 units in February from 6,367 in the same month last year. The January figure of 4,090 units, represented a fall of 3 pct month-on-month.
     Passenger car sales, meanwhile, rose to 2,603 units in February from 1, 727 last year. Month-on-month, the figure was 8 pct lower from 2,421 units in January.
     (1 usd = 56.27 pesos)
     cecille.yap@afxasia.com

Philippines' Arroyo fears major terror attack, seeks neighbors' help - adviser

     MANILA (AFX-ASIA) - President Gloria Arroyo fears a major terrorist attack may be imminent in the Philippines and has asked neighbors for information to help her fight the threat, a top security adviser said today.
     National Security Adviser Norberto Gonzales said the attack will likely come from Muslim militants, blamed for bombings at an airport and a port in the southern Philippines city of Davao early last year that killed 38 people.
     There have been no other major terrorist actions in the country since then, but Gonzales said a fresh wave of deadly attacks in other countries suggest that "we have to be far more vigilant."
     A number of western governments have issued a spate of travel advisories in recent days, warning their citizens of potential terrorist acts in the largely Roman Catholic Southeast Asian nation.
     Gonzales said Manila has quietly stepped up security at seaports and airports ahead of the dry season months of March and May, when travel will be at its peak.
     "The targets are civilian, the targets are tourists. We are putting safety measures in all seaports and airports," he told a Foreign Correspondents Association of the Philippines forum.
     He said Manila is sending a police mission to Malaysia to interrogate suspected Indonesian militants arrested recently after allegedly completing training at a camp that Filipino Muslim rebels supposedly run on the southern island of Mindanao.
     The government also plans to ask Jakarta to allow it to interrogate certain detained militants, Gonzales added.
     Arroyo is also set to hold peace talks with the separatist Moro Islamic Liberation Front (MILF) in Malaysia next month with the aim of denying foreign militants access to alleged MILF training camps on Mindanao, the theater of a decades-old Muslim separatist rebellion.
     Gonzales said Manila is aware that a guerrilla-led MILF faction, which trained in Afghanistan, could be sheltering foreign militants.
     He said the government is also tackling an militants efforts to "subvert" Islamic schools and is tracking activities of Middle Eastern Islamic missionaries on Mindanao who could be propagating extremist teachings or financing anti-government activity.

Philippine Crown Equities cedes control of tollway developer Hopewell Crown

     MANILA (AFX-ASIA) - Holding firm Crown Equities Inc said it has ceded control of unit Hopewell Crown Infrastructure Inc to a consortium led by Northeast Development & Acquisitions Corp (NDAC), after the conditions for closing the transaction were satisfied on March 2.
     Hopewell Crown has a joint-venture agreement with state-run Philippine National Construction Corp (PNCC) for the rehabilitation, expansion, operation and maintenance of the South Luzon expressway, which runs from Alabang in metropolitan Manila to the province of Batangas. The project cost was earlier estimated at 12 bln pesos.
     Under the deal, NDAC committed itself to buying 60 pct of Crown Equities' 90 pct stake in Hopewell Crown, or a total of 150.09 mln shares.
     Committed to be sold outright were 100.06 mln shares or 40 pct of Hopewell Crown, the payment for which will be made in two tranches over a six-year period.
     Crown Equities said it received the first payment tranche of 50 mln pesos on March 2.
     The company has agreed to sell to NDAC the remaining 50.03 mln shares at a future date to be agreed on.
     Crown Equities said it has decided to transfer its controlling interest in Hopewell Crown to allow the company to begin to deliver its commitment under the joint-venture agreement with PNCC.
     "Given that Hopewell Crown is still at its pre-operating stage, the disposition of Crown Equities investments in Hopewell Crown would result in a partial but earlier investment recovery and would allow Crown Equities to sidestep a larger cash requirement to fund the project's equity," the company told the stock exchange.
     (1 usd = 56.273 pesos)
     cecille.yap@afxasia.com

Manila shares close down on security, political concerns; index at yr's lowest

     MANILA (AFX-ASIA) - Share prices closed down, but off lows, mirroring the generally weak sentiment in the region following Wall Street's losses overnight in the aftermath of the Madrid train bombings, dealers said.
     Losses in Philippine Long Distance Telephone (PLDT), Ayala stocks and other blue chips pulled the key index to its lowest finish so far this year.
     Dealers said global security concerns have re-emerged after the bomb attacks, further undermining already weak local sentiment due to pre-election uncertainties and the lack of fresh positive news.
     The composite index closed down 11.28 points or 0.79 pct at 1,423.79 on volume of 111.67 mln shares valued at 623.4 mln pesos. It traded between 1, 416.86 and 1,435.07. It is the index's weakest close since Dec 22, when it finished at 1,421.03.
     Cross and block sales worth over 366 mln pesos, including those in PLDT, boosted market turnover.
     In the broader market, losers beat gainers 26 to seven, with 36 stocks unchanged.
     The Madrid bombings pushed US equity markets down overnight, with Asian American Depositary Receipts (ADRs), including those of PLDT, posting losses.
     PLDT was top-traded and down 20 pesos at 890 on 281,870 shares. Its ADRs fell 0.38 usd to 15.67.
     (1 usd = 56.28 pesos)
     edelacruz@afxasia.com

Manila shares extend declines on security, election concerns

     MANILA (AFX-ASIA) - Share prices were lower mid-session, extending their declines to mirror the generally weak sentiment in the region, following Wall Street's losses overnight in the aftermath of the Madrid bombings, dealers said.
     They said global security concerns have re-emerged after the bomb attacks, undermining further already weak local sentiment due to pre-election political uncertainty.
     The lack of fresh positive news also forced investors onto the sidelines.
     At 10.24 am, the composite index was down 16.85 points, or 1.17 pct, at 1, 418.22 on volume of 31.9 mln shares valued at 154.7 mln pesos. It has so far traded between 1,417.23 and 1,435.07.
     In the broader market, losers beat gainers 18 to one, with 21 stocks unchanged.
     The Madrid bombings pushed equity markets in the US into a widespread retreat overnight, with Asian American Depositary Receipts (ADRs), including those of Philippine Long Distance Telephone Co (PLDT), posting losses.
     PLDT was top-traded so far on 96,220 shares and down 25.00 pesos at 885. 00.Its ADRs fell 0.38 usd to 15.67 overnight.
     "It's very possible that the market will test the 1,400 support level, but it should not be a concern as we would like to see it undergo a correction," DA Market Securities president Nestor Aguila said.
     "We want to see it correct up to 1,350-1,380 range. I believe this will open some interesting buying windows for investors, especially in stocks with positive earnings prospects this year."
     (1 usd = 56.28 pesos)
     edelacruz@afxasia.com

Philippine ChemPhil's request to exempt property from agrarian reform rejected

     MANILA (AFX-ASIA) - Chemical Industries of the Philippines Inc (ChemPhil) said the agrarian reform department has denied the company's petition to exempt its 187.67-hectare property in Nueva Ecija province from the government's agrarian reform program.
     "The company will file within the reglementary period a motion for reconsideration of the order," ChemPhil vice president for legal services Rolando Navarro said in a disclosure to the stock exchange.
     At 10.22 am, ChemPhil was untraded after its previous close of 55 pesos per share.
     (1 usd = 56.273 pesos)
     cecille.yap@afxasia.com

STOCK ALERT - Philippines' PLDT weaker on further ADR fall

     MANILA (AFX-ASIA) - Philippine Long Distance Telephone extended its loss in early trade after a further drop in its American Depositary Receipts in New York overnight, dealers said.
     PLDT was top-traded on 16,890 shares so far and down 15 pesos at 895.00.
     Its ADRs fell 0.38 usd to 15.67 overnight.
     (1 usd = 56.28 pesos)
     edelacruz@afxasia.com

Philippines needs 2-3 bln usd in 5 yrs to boost power supply-industry official

     MANILA (AFX-ASIA) - The Philippines needs investment of around 2-3 bln usd in the next five years to build new power-generating plants and meet growing demand, an industry official said.
     Federico Lopez, president of First Generation Holdings Corp, said the Luzon island alone will need an additional power supply of about 700 megawatts by 2007.
     First Gen is one of the power-related companies of the Lopez family, which controls Manila Electric Company, the country's largest power distributor.
     "It is already too late to avoid crises in many parts of the country," he told reporters, noting that a lead time of at least four to five years is needed to finance and build new power plants.
     He stressed the importance of maintaining at least 20 pct of dependable capacity as part of a particular area's power reserves.
     "Breaching the reserve requirement could result in rotating brownouts. It's not necessarily just the lack of capacity that will lead to this, but the lack of reserves. When, for example, a plant trips or has some downtime to allow maintenance, there will be power outages if the reserves are not enough," Lopez said.
     He said that based on the company's own study, a power shortage may hit Luzon a year ahead of the government's projection of 2008 under its Power Development Plan. In the Visayas, he noted some areas have already been experiencing power shortages, particularly in the Cebu and Panay provinces.
     Lopez said a similar scenario is seen in Mindanao.
     The deficit-spending government however will not be able to finance capital-intensive power projects, he said.
     A massive power crisis in the 1990s forced the government to offer contracts to build new plants and rehabilitate existing ones to the private sector.
     afxmanila@afxasia.com

Vietnam, South Korea express interest in Philippine chickens - report

     MANILA (AFX-ASIA) - Vietnam and South Korea are interested in importing dressed chickens from the Philippines, reported, a local newspaper reported, citing the Philippine Association of Broiler Integrators (PABI).
     The Philippine Daily Inquirer said local government and PABI officials have been negotiating for possible shipments of local chickens to bird-flu afflicted countries.
     The Philippines remains free of the bird flu virus.
     PABI members oinclude the country's largest agri-business firms, such as San Miguel Foods Corp, RFM Corp, Swift Foods Inc, and Universal Robina Corp.
     PABI director Rita Palabyab also told the daily that the group's members have sent an initial shipment of 14 tons of dressed chickens to Japan, and that another 23 tons will be sent there next week.
     "This forms part of the 37 tons the broiler integrators have initially settled on with Japanese firms led by Marubeni Corp," said Palabyab, who is a vice president of San Miguel.
     edelacruz@afxasia.com

Philippines' GSIS acquires more Equitable PCI shares - report

     MANILA (AFX-ASIA) - State-run pension fund Government Service Insurance System (GSIS) has acquired an additional 1.76 mln shares of Equitable PCI Bank from the market, bringing its total equity stake in the bank to about 11. 47 pct, according to a report in the Philippine Daily Inquirer.
     The GSIS' equity in Equitable PCI, together with the 25.8 pct held by another state-run pension fund, the Social Security System (SSS), brings the government's stake in the bank to 47.27 pct, the report said, without citing its source.
     The government's combined stake is just "a few percentage points away from Equitable PCI achieving the status of a government-owned or controlled corporation," the report added.
     GSIS, the pension fund of government workers, acquired the additional shares last month at 40.80 pesos each, the report said, against the 93.08 pesos per share price it paid when it bought into the bank a few years ago.
     SSS is the pension fund of private sector workers.
     Equitable PCI closed at 38.50 pesos yesterday.
     Banco de Oro Universal Bank (BDO) earlier said SSS was considering seeking an "all-cash" payment for its Equitable PCI shares that BDO has agreed to purchase.
     Under their original agreement, BDO was to pay SSS, the state-run pension fund for private sector workers, 43.50 pesos for each Equitable PCI share, or a 30 pct premium over the stock's end-2003 closing price.
     BDO was supposed to make a cash down-payment of 1 bln pesos and secure the balance of 13 bln through a 6.5-year zero-coupon non-amortizing promissory note.
     The transaction involves some 187.85 mln Equitable PCI shares.
     (1 usd = 56.25 pesos)
     edelacruz@afxasia.com

Manila shares outlook - Lower on security, election concerns

     MANILA (AFX-ASIA) - Share prices are likely to weaken further as global security concerns have re-emerged following the bombings in Spain, with sentiment undermined further by pre-election political worries locally, dealers said.
     The lack of fresh positive news have also pushed investors to the sidelines.
     The Madrid bombings pushed equity markets in the US into a widespread retreat last night, with Asian ADRs, including Philippine Long Distance Telephone Co, posting losses.
     Yesterday, the composite index closed down 20.60 points or 1.42 pct at 1, 435.07.
     "We're not immune to what's going on in the international markets so I think we're likely to test the 1,400 key index level," First Grade Holdings managing director Astro del Castillo said.
     "Investors have also not seen any positive developments locally to spur buying interest even after the market's successive falls."
     BPI Capital Securities said in its daily note that political uncertainties due to the upcoming May 10 presidential and local elections will continue to weigh on market sentiment.
     "However, we think that market weakness remains an opportunity to accumulate select issues. We still maintain that the earnings outlook for 2004 is positive," it said.
     If the main index fails to hold support at 1,435, the next range is 1,385 to 1,400. Resistance is still at 1,500, BPI said.
     edelacruz@afxasia.com

Philippines' Arroyo says auto assemblers to invest 330 mln usd in the country

     SANTA ROSA, Philippines (AFX-ASIA) - Japanese and other foreign automakers plan to invest 330 mln usd in expanding manufacturing facilities in the Philippines, President Gloria Arroyo said.
     "Next week I will be back in Laguna (province) to bring in 330 million dollars in investments," she said in a speech to local women in this industrial town south of Manila, which hosts assembly plants of Japanese, US and other automakers.
     Arroyo mentioned by name Japanese automakers Mitsubishi, Nissan, Toyota, Honda, and Isuzu, but did not discuss specific plans by any of them. She suggested however the planned investments will be for the export markets.
     "With so many car factory expansion projects here and with the setting up of factories for cars as well as components, Santa Rosa will become the Detroit of the Philippines," she said, referring to the US automotive capital.
     The assemblers sell less than 100,000 units to the domestic market every year, but Arroyo said some of the assemblers are planning export facilities for the Asian as well as European markets.
     Vehicle sales in the Philippines rose 7.73 pct to 90,535 units in 2003 from the previous year.

Philippine NTC to seek Smart's final decision on IPO requirement

     MANILA (AFX-ASIA) - The National Telecommunications Commission (NTC) will ask Smart Communications Inc to inform the regulator immediately of a decision on whether to push ahead with its initial public offering on or before August this year.
     Smart, the country's largest wireless service provider and crown jewel of Philippine Long Distance Telephone Co (PLDT), is required to list on the local stock exchange not later than August under its franchise.
     "We would tell Smart to inform us immediately if they would defer the IPO so the NTC could start the process of deliberating whether or not we would allow them to defer it," said NTC chairman Ronald Solis.
     Smart and PLDT president Napoleon Nazareno earlier was quoted as saying in a newspaper report that Smart may not have to undertake an IPO since its parent, PLDT, is already a publicly listed company.
     "The mother being listed could be reason enough for a wholly owned subsidiary not to," Napoleon said.
     He said this is one of the arguments which lawyers of Smart are lining up for the company to be allowed to defer if not altogether be granted an exemption to list publicly.
     Nazareno said Smart would need at least two to three years before it could undertake an IPO as "this will give PLDT enough time to deleverage to a more sustainable position."
     Earlier, PLDT chairman and then president Manuel Pangilinan said there might be a slight delay in Smart's IPO given unfavorable market conditions.
     There have also been speculations on the stock market that Smart might merge with PLDT's 45-pct owned wireless company, publicly-listed Pilipino Telephone Corp (Piltel), to facilitate Smart's backdoor listing.
     Piltel posted significant gains on the stock market due to persistent Smart-Piltel merger speculations.
     NTC's Solis said the NTC, under the law, is the agency that will tackle Smart's IPO deferral.
     afxmanila@afxasia.com

Philippines raises 500 mln usd via 11-year global bond issue

     (Updating with government officials' comments on bond issue)
     MANILA (AFX-ASIA) - The Philippine government said it has sold 500 mln usd worth of 11-year global bonds at a coupon rate of 8.875 pct to yield 9.0 pct.
     The bonds will mature in March 2015, the government's investor relations office said.
     Finance undersecretary Eric Recto said the "successful" issue demonstrates the healthy appetite that investors have for Philippine debt securities.
     "We are pleased with the outcome of the transactions as it clearly demonstrated the continuing appeal of ROP (Republic of the Philippines) credit with investors despite the current market volatility," Recto said.
     "Furthermore, through this transaction, we have been able to substantially cover our budgetary requirements for 2004 ahead of the upcoming elections," he added.
     Based on the government's original foreign borrowing program for this year, it still needs to raise more than 100 mln usd.
     The government has set a budget deficit ceiling of 197.8 bln pesos for this year, or 4.2 pct of GDP. Standard & Poor's Ratings Services has assigned a BB debt rating to the bond issue. S&P said the sovereign credit rating has the backing of the Philippines' adequate external liquidity, with total debt servicing projected at 37 pct of current account receipts this year, or similar to that of rated peers.
     However, it pointed to a major concern over the country's budget deficit and growing dependence on foreign debts.
     The Philippines has mandated HSBC, Credit Suisse First Boston (CSFB) and UBS to sell the bonds.
     The government's remaining external financing requirements for this year stand at about 680 mln usd.
     ING, meanwhile, said it believes there is little possibility that the Philippines will voluntarily restructure commercial debts, or be forced to do it.
     The government's latest borrowing exercise has been in the spotlight, after opposition presidential candidate Fernando Poe Jr said he will "look into the possibility of restructuring our sovereign debt in the domestic and international financial markets," if he gets elected on May 10.
     Reports said the central bank's investor relations office has been swamped by calls from bond holders in Asia and Europe over Poe's plan.
     Poe is in a close race with incumbent Gloria Arroyo for the presidency, based on recent surveys.
     But his candidacy has spooked the financial markets, with investors questioning his competence to manage the economy. Poe is a high school dropout with no experience in politics and governance.
     Poe's debt-restructuring comments triggered a reaction from the central bank, with the governor, Rafael Buenaventura, asking him to clarify his stance.
     Central bank deputy governor Amando Tetangco also had to issue a statement yesterday, assuring creditors that the Philippines remains committed to honoring its debt obligations.
     Poe's camp, meanwhile, said what he may do is to ask creditors to stretch the maturity of outstanding loans, and not seek a debt moratorium.
     "News reports that the government was coming to the market with an 11-year 500 mln usd bond slammed ROPs, with prices down 1.0-1.5 points in active Asian trading. FPJ's (Fernando Poe Jr's) statement that his administration would look into restructuring the country's foreign and domestic debt didn't help," ING said.
     But ING believes "the likelihood of a voluntary commercial debt restructuring is minimal and a forced restructuring is unlikely on our economic forecasts (as) FPJ himself has since clarified that 'the government must honor its commitment to creditors'."
     ING noted, however, that the Philippines' new bond issue "raises fears of a supply overhang."
     "Seldom do stories about Philippine sovereign US dollar bond issues not include the adjective 'opportunistic.' But the country's presence in the bond market in the politically-charged period ahead of the 10 May elections risks investors mistaking opportunism with desperation," ING said.
     But ING said it considers the new issue as an "opportunistic borrowing."
     The head of the government's investor relations office, Corazon Guidote, said the global bonds were oversubscribed upon launch, but the government limited the issue to 500 mln usd.
     "There's enough demand for the bonds. The pricing could have been better without the political factors. But it is not so bad. It was very reasonable under the circumstances," Guidote said.
     Central bank's Buenaventura, meanwhile, said that the national government should maintain optimum flexibility on the borrowing mix, currently at 70:30 in favor of domestic borrowings.
     "I think we should not be obsessed by the mix. It should represent what the market situation is at the time we are able to borrow. When you come out with specific percentages the market would be able to read you," Buenaventura said.
     (1 usd = 56.285 pesos)
     cecille.yap@afxasia.com

Philippines' Arroyo criticizes election rival's debt plan

     MANILA (AFX-ASIA) - President Gloria Arroyo has criticized movie star rival Fernando Poe Jr's proposal to restructure government debt, which Manila says unnerved financial markets.
     Both the Arroyo government and the central bank assured foreign creditors that the Philippines is committed to repaying its debt.
     Poe, widely seen as Arroyo's strongest challenger, unsettled the markets on Tuesday when he said that, if he won the May 10 vote, he would "look into the possibility of restructuring our sovereign debt in the domestic and international financial markets."
     Poe spokesman Francis Escudero later said the candidate only meant the "stretching" out of the amortization period of paying these obligations and was not an outright debt repudiation.
     "The president's policy on this is that any debt restructuring cannot be done unilaterally, which is the impression conveyed by the first statement of Mr Fernando Poe," Arroyo spokesman Ignacio Bunye said today.
     "The impact would be adverse, our standing in the international financial community would suffer by initiating a unilateral act," he said over government radio.
     "We don't want the Philippines to attain a reputation for welching on debts," Bunye added.
     "The Philippines is committed to honoring its debt obligations," deputy central bank governor Amando Tetangco said in a written statement.
     The economic daily Business World reported today that the central bank's investor relations office was swamped with calls from bond-holders in Asia and Europe over Poe's plan.
     In the dying years of the Ferdinand Marcos dictatorship in 1983, Manila defaulted on its foreign obligations, shutting itself out of the international capital markets for a decade. Marcos was toppled in a popular revolt in 1986.
     "If we have an obligation, we have to meet it, but this will not prevent us from seeking better terms, longer maturities and lower costs from creditors," Bunye said.
     Saddled by a narrow tax base and shallow capital markets, the Philippines has been under pressure to borrow abroad to meet finance its chronic national budget deficits.
     The Philippines is the second largest debt issuer in Asia after Japan. It issued 500 mln usd worth of 11-year bonds this week to finance part of the 2004 national budget deficit of 197.8 bln pesos.

Philippine central bank leaves policy interest rates steady

     (Updating with central bank official's comments)
     MANILA (AFX-ASIA) - The policy-making Monetary Board voted to keep the central bank's policy interest rates steady after its monthly policy review today, as it views the inflation environment as still benign despite the peso's weakness against the US dollar, the regulator said.
     The rates stay at 6.75 pct for overnight borrowing and 9.00 pct for overnight lending.
     "Based on its overall assessment of economic and financial indicators, the Monetary Board concluded that the current monetary policy stance remains appropriately supportive of the economy's low inflation growth path," central bank governor Rafael Buenaventura said in a statement.
     He said the inflation outlook also looks manageable, although with some downside risks such as the impact of volatile movements in international oil prices, transport fare adjustments and continuing pressures on the foreign exchange markets, driven partly by political developments.
     Filipinos will elect a new president, a vice president, members of Congress and local government officials on May 10.
     Buenaventura said monetary authorities took into account the relative stability in the foreign exchange market in today's policy review.
     The peso has been rangebound for the past few days, hovering in the range of 56.15 and its record low of 56.35 to the US dollar.
     It ended at 56.250 today, against yesterday's close of 56.235.
     The government targets full-year inflation of between 4.0 and 5.0 pct. In the first two months of the year, the annualized rate averaged 3.4 pct.
     edelacruz@afxasia.com

Chinatrust Philippines unit launches five-year time deposit instrument

     MANILA (AFX-ASIA) - Chinatrust (Philippines) Commercial Banking Corp said it has started offering to clients a five-year time deposit instrument, dubbed as "INNOV8."
     The new product combines both monthly interest payments at a fixed interest rate of 8.0 pct per annum and a lump sum bonus equivalent to 0.8 pct per year for five years at the end of the term.
     The deposit is tax exempt if the full term of five years is completed.

     The minimum deposit has been set at 100,000 pesos, which will increase to 150,000 at the end of the five-year period.
     "Consumers today benefit from competitive rates of big banks that commit periodic interest payments. Other banks, meanwhile, offer better yields that can be enjoyed only after completing the quite lengthy five-year tenor," said Chinatrust executive vice president and treasury head Roland Avante.
     Chinatrust's new five-year time deposit offers both, he added.
     For depositors intent on maximizing investments by keeping them untouched in the bank for five years, Chinatrust guarantees returns of 150 pct of the amount deposited, Avante said.
     (1 usd = 56.28 pesos)
     cecille.yap@afxasia.com

Philippine SEC registers Manila Jockey's 179.9 mln shares for rights offering

     MANILA (AFX-ASIA) - The Securities and Exchange Commission (SEC) said it has approved the application of racetrack operator Manila Jockey Club to register 179.9 mln shares for a planned increase in its authorized capital to 500 mln pesos from 300 mln.
     The shares, with a face value of 1.00 peso each, will be offered through a stock rights offering.
     Based on the Manila Jockey Club's plan, shareholders will be entitled to buy one share for every one share held at 1.00 peso apiece.
     The company has tapped Banco de Oro Capital and Investment Corp to be the underwriter.
     Proceeds of the offering, amounting to 179.9 mln pesos, will be used to pay the company's various existing contracts involving the construction of its Turf Building at the San Lazaro Leisure Park (SLLP) in Carmona, Cavite.
     The park, which will replace the club's San Lazaro Hippodrome in Sta Cruz, Manila, is currently being developed into a mixed-use complex.
     Last month, the racetrack operator tied up with Century Communities Corp, a member of the Century Group, to transform its 17.09-hectare property into an exclusive residential subdivision. The property is located within the 77- hectare SLLP.
     Manila Jockey has also finalized an agreement with the Philippine Amusement and Gaming Corp to set up a casino within the park.
     Its new horse-racing facility in Cavite is a joint venture with KPPI Land Corp of the Kuok Group.
     Construction works within the park are expected to be completed by the end of the year.
     Manila Jockey posted a net loss of 3.15 mln pesos in the first nine months of 2003, a sharp reversal from the 64.12 mln net profit it reported in the same period in 2002.
     The net loss was due largely to lower income from operations, it said.
     (1 usd = 56.28 pesos)
     afxmanila@afxasia.com

Philippine central bank leaves policy interest rates steady

MANILA (AFX-ASIA) - The policy-making Monetary Board voted to keep the central bank's policy interest rates steady at 6.75 pct for overnight borrowing and 9.00 pct for overnight lending, the regulator said.
afxmanila@afxasia.com

Philippines' Metrobank, HK's Bank of East Asia sign cooperation deal

     MANILA (AFX-ASIA) - The Philippines' largest lender, Metropolitan Bank & Trust Co, said it has signed a cooperation agreement with Bank of East Asia Ltd (BEA), the biggest independent local bank in Hong Kong.
     In a statement, Metrobank said the deal with BEA will allow it to expand its international reach and respond to the rising demand of corporate customers in China through its partner's well-established branch network there.
     Metrobank, the only Philippine bank with authorization from Beijing to operate in China, has a branch in Shanghai.
     For its part, Metrobank will provide financial services to BEA customers doing business in the Philippines.
     No other details were disclosed.
     cecille.yap@afxasia.com

Philippines' 500 mln usd global bond coupon rate at 8.875 pct

     MANILA (AFX-ASIA) - The Philippine government said it has sold a 500 mln usd 11-year global bond issue at a coupon rate of 8.875 pct to yield 9.0 pct.
     The bonds will mature in March 2015, the government's investor relations office said.
     Standard & Poor's Ratings Services has assigned a BB debt rating on the bond issue.
     S&P said the sovereign credit rating has the backing of the Philippines' adequate external liquidity, with total debt servicing projected at 37 pct of current account receipts this year, or similar to that of rated peers.
     However, it pointed to a major concern over the country's budget deficit and growing dependence on foreign debts.
     The Philippines mandated HSBC, Credit Suisse First Boston (CSFB) and UBS to sell the bonds.
     The government's remaining external financing requirement for this year stood at about 680 mln usd after the pre-funding of most of it last year.
     ING meanwhile said it believes that there is little possibility that the Philippines will voluntarily restructure commercial debts, or be forced to do it.
     The government's latest borrowing exercise was in the spotlight after opposition presidential candidate Fernando Poe Jr said he would "look into the possibility of restructuring our sovereign debt in the domestic and international financial markets" if he gets elected on May 10.
     Reports said the central bank's investor relations office was swamped by calls from bond holders in Asia and Europe over Poe's plan.
     Poe is in a close fight with incumbent Gloria Arroyo for the presidency, based on recent surveys.
     But his candidacy spooked financial markets, as investors questioned his competence to manage the economy. Poe is a high school dropout with no experience in politics and governance.
     Poe's debt-restructuring comments triggered a reaction from the central bank, with the governor, Rafael Buenaventura, asking him to clarify his stance.
     Central bank deputy governor Amando Tetangco also had to issue a statement on Wednesday assuring creditors that the Philippines remains committed to honoring its debt obligations.
     Poe's camp meanwhile said what he may do is to ask creditors to stretch the maturity of outstanding loans, and not to seek a debt moratorium.
     "News reports that the government was coming to the market with an 11-year 500 mln usd bond slammed ROPs, with prices down 1-1.5 points in active Asian trading. FPJ's (Poe's initials) statement that his administration would look into restructuring the country's foreign and domestic debt didn't help," ING said.
     But ING believes "the likelihood of a voluntary commercial debt restructuring is minimal and a forced restructuring is unlikely on our economic forecasts (as) FPJ himself has since clarified that 'the government must honor i ts commitment to creditors'."
     ING noted however that the Philippines' new bond issue "raises fears of a supply overhang."
     "Seldom do stories about Philippine sovereign US dollar bond issues not include the adjective 'opportunistic.' But the country's presence in the bond market in the politically charged period ahead of the 10 May elections risks investors mistaking opportunism with desperation," ING said.
     But ING said it considers the new issue as an "opportunistic borrowing."
     (1 usd = 56.285 pesos)
     cecille.yap@afxasia.com

Philippines' San Miguel Thai ground-breaking marks start of regional expansion

     MANILA (AFX-ASIA) - San Miguel Corp said it staged a ground-breaking ceremony today for its manufacturing complex in the Amata City (Rayong) Industrial Estate in Thailand, signalling the start of regional expansion that also covers China and five other markets.
     "Similar ground-breaking activities are scheduled within the year in Australia, Indonesia, Vietnam, Taiwan, China and Malaysia, putting into high gear the company's regional expansion program," the food and beverage conglomerate said in a statement.
     The Amata City venture called San Miguel (Thailand) Co Ltd involves the manufacture and distribution in Thailand of all of San Miguel's product lines including beverage products, processed foods and snacks, and feed mill operations.
     San Miguel already has more than 90 pct of the domestic beer market.
     The first phase of the venture will be the construction of a non-alcoholic beverage facility in the Amata industrial estate, it said, with giving a specific timetable.
     San Miguel gave no financial details about the Thailand venture in its statement, but the company earlier said it will invest 100 mln usd in each of the seven markets covered by its expansion program
     edelacruz@afxasia.com

Manila shares close lower in line with Wall Street falls

     (Updating with analysts' comments, share prices and other details)
     MANILA (AFX-ASIA) - Share prices closed sharply lower for the fifth day in a row, as the main index ended at its lowest level in four weeks, tracking Wall Street's steep declines overnight.
     A dearth of fresh corporate news and concerns ahead of the May presidential election discouraged investors from taking aggressive positions in the market and some were quick to cash in on short-term gains, they added.
     The 30-company composite index closed down 20.60 points, or 1.42 pct, at 1,435.07 on volume of 169.46 mln shares worth 789.7 mln pesos. It traded between 1,432.33 and 1,447.13 points.
     In the broader market, losers outnumbered gainers 34 to 11, while 43 stocks closed unchanged.
     Philippine Long Distance Telephone Cop closed sharply lower, falling 30. 00 pesos to 910.00 on 243,210 shares. Dealers said PLDT tracked the overnight fall of 0.49 usd to 16.05 in its American Depositary Receipts in New York.
     US stocks plunged overnight to their lowest levels since late 2003 to extend Wall Street's losing streak to three days.
     Opposition candidate Fernando Poe Jr's pronouncement that he will consider restructuring the Philippines' debts if he wins the May 10 presidential poll also spooked investors over renewed concerns on the country's ability to meet its obligations.
     The statement came at a time when the government is in the international market place for a global bond issue worth 500 mln usd and it prompted the central bank to say that the Philippines remains committed to honoring its debt obligations.
     "It touched a sensitive nerve, but not enough to be a major dampener to the stock market," First Grade Holdings managing director Astro del Castillo said.
     He added investors remain wary about who will win the presidential election and want to hear candidates present their economic platforms to the public.
     "Investors have been reluctant to buy stocks due to the lack of positive earnings and economic news. Moreover, there are others who are worried that last year's stock market rally means share prices may have already factored in gains in earnings for this year," AB Capital research director Jose Vistan Jr said.
     Top-traded SM Prime shed 0.10 to 5.70 on 38.89 mln shares.
     Globe Telecom was down 10 at 850 on 128,480 shares.
     Pilipino Telephone Corp fell 0.04 to 1.66 on 19.6 mln shares.
     Ayala Corp was 0.30 lower at 5.80 on 2.47 mln shares, while property unit Ayala Land was flat at 5.40 on 1.7 mln shares.
     First Holdings dropped 0.50 to 23.
     Aboitiz Equity Ventures dipped 0.05 to 2.95.
     The all-shares index declined 18.93 points to 917.59.
     The commercial-industrial index fell 38.81 to 2,231.88.
     Property slid 4.00 to 512.90.
     Mining shed 30.39 to 1,458.79, while oil dropped 0.03 to 1.20.
     Banking and finance lost 0.94 to 429.87.
     (1 usd = 56.28 pesos)
     cecille.yap@afxasia.com

Forex - Philippine peso slightly weaker ahead of central bank policy review

     MANILA (AFX-ASIA) - The peso traded weaker against the US dollar in the morning, but remains rangebound ahead of the central bank's monthly policy review scheduled for today, dealers said.
     The market, however, is not expecting any surprises from the central bank, which may just leave policy interest rates unchanged at 6.75 pct for overnight borrowing and 9.00 pct for overnight lending.
     The peso averaged 56.278 to the dollar at the lunch break, after trading between 56.260 and 56.300, on volume of 49.89 mln usd. It closed at 56.235 yesterday.
     The peso touched its record low of 56.35 to the dollar for the third time in two weeks on March 8, but rumors of central bank dollar sales in the spot market gave the local unit a boost.
     "The peso is still boxed in the 56.15-56.35 range. I don't think the market is really looking forward to the central bank's decision," a commercial bank dealer said.
     "We've been seeing demand (for dollars) at levels close to 56.15 and sales at the 56.30s (level)."
     Political concerns ahead of the May 10 presidential and local elections continue to weigh on the local unit, dealers said.
     edelacruz@afxasia.com

Philippines sets quarterly budget deficit ceilings, maintains cautious stance

     MANILA (AFX-ASIA) - The government said it is maintaining its cautious fiscal stance adopted in 2003, which is reflected in the quarterly budget deficit ceilings set for this year.
     The ceilings have been set at 58.9 bln pesos for end-March, 79.6 bln pesos for end-June, 143.3 bln for end-September and 197.8 bln for end-2004.
     The inter-agency Development Budget and Coordination Committee (DBCC), which sets the government's macroeconomic targets, has finalized these ceilings.
     "The deficit targets essentially track the 2003 actual levels, except for the last quarter, given the 1.0 pct reduction in the annual deficit level," a Department of Budget and Management (DBM) statement said.
     It expects expenditures to be "moderate" during the first half of the year, especially with the election ban in place on the elections. Expenditures from January to June will take into account the budget to conduct the elections and a salary adjustment for the military.
     Filipinos will go to polls on May 10 to elect a new president, a vice president, members of Congress and local government officials.
     Financial market analysts and investors have expressed concerns that the national government will spend heavily ahead of the May polls to win votes for administration candidates.
     The DBM said the deficit target for the second half already incorporates expected higher revenue collections and the implementation of projects earlier deferred on account of the election ban.
     "This affirms the government's commitment to balancing the budget by 2009, consistent with its deficit reduction strategy," DBCC chairwoman and Budget Secretary Emilia Boncodin said.
     She said the spending program sustains the government's decision to reduce its budget shortfall over the medium term to 197.8 bln pesos, or 4.2 pct, of the gross domestic product this year, from 210.7 bln, or 5.2 pct, of GDP in 2002 and 199.9 bln, or 4.6 pct, of GDP last year.
     She is confident the deficit will narrow with revenues growing 7.9 pct this year and disbursements at a lower 5.8 pct over 2003 levels.
     The government will, therefore, be able to reduce significantly its dependence on borrowed funds to finance the budget and, consequently, control the growth of its debt stock, Boncodin said.
     For 2005, the DBCC has approved a budget deficit ceiling of 188 bln pesos, or 3.7 pct, of GDP, a government source earlier said.
     The deficit of 16.12-bln pesos in January this year was well within expectations, the finance department had said.
     (1 usd = 56.28 pesos)
     edelacruz@afxasia.com

Philippines to dispose of 15 power generating plants by June - PSALM

     MANILA (AFX-ASIA) - The government plans to sell off 15 state-owned power plants by June, the agency assigned the task of disposing the assets said today.
     The power plants, with a total capacity of more than 1,400 megawatts, will be sold in several batches starting with the disposal of a 3.5MW hydroelectric facility in the southern Philippines in March, said the Power Sector Assets and Liabilities Management Corp (PSALM).
     The assets to be sold range from a 600MW bunker fuel plant to a 0.4MW hydroelectric facility. Five of the plants are already non-commissioned, PSALM personnel said.
     PSALM, which has been given responsibility of selling the assets of the state-run National Power Corp (Napocor), would not reveal the estimated price of the facilities to be sold.
     Under the proposed sale structure, buyers will not be obligated to run the plants and can dismantle or transfer the assets if they wish. They are also under no obligation to retain the existing employees.
     The plants will also be sold free of debt as PSALM will absorb all debts to Napocor.
     Interested parties will have the option of buying or leasing on long terms, the land on which the assets stand, PSALM officials added.
     Napocor is required to sell or spin-off its 35 generation assets under a power reform law. It was not stated when the other plants of Napocor would be sold.

Philippine Ayala Corp's 12.67 mln shares sold in block - PSE

     MANILA (AFX-ASIA) - Some 12.67 mln Ayala Corp shares were sold in a block sale in mid-morning trade, data from the Philippine Stock Exchange (PSE) show.
     The shares were sold and bought by UBS Securities Philippines at 6.10 pesos each or a total of 77.29 mln pesos.
     At 10.48 am, Ayala Corp was down 0.30 at 5.80.
     (1 usd = 56.281 pesos)
     cecille.yap@afxasia.com

Manila shares lower early in line with Wall Street decline

     MANILA (AFX-ASIA) - Share prices led by Philippine Long Distance Telephone Co (PLDT) were lower in early trade, tracking Wall Street's decline overnight, dealers said.
     Political concerns ahead of the May 10 elections and a dearth of fresh corporate leads continue to weigh on sentiment.
     At 9.55 am, the 30-company composite index was down 15.60 points or 1.07 pct at 1,440.07 on volume of 35.44 mln shares worth 273.57 mln pesos. It has so far traded between a low of 1,439.71 and a high of 1,447.13.
     In the broader market, losers beat gainers 14 to 3, while 19 stocks were unchanged.
     PLDT was down 30.00 pesos at 910 on 89,600 shares in line with the sharp fall of its New York-traded American Depositary Receipts last night.
     The market's support is seen at 1,430.
     (1 usd = 56.286 pesos)
     cecille.yap@afxasia.com

Philippines' 500-mln usd global bond coupon rate at 8.875 pct

     MANILA (AFX-ASIA) - The Philippine government said it has sold a 500-mln usd 11-year global bond issue at a coupon rate of 8.875 pct to yield 9.0 pct.
     The bonds will mature in March 2015, the government's investor relations office said.
     Standard & Poor's Ratings Services has assigned a BB debt rating on the bond issue.
     S&P said the sovereign credit rating has the backing of the Philippines' adequate external liquidity, with total debt servicing projected at 37 pct of current account receipts this year, or similar to that of rated peers.
     However, it pointed to a major concern over the country's budget deficit and growing dependence on foreign debts.
     The Philippines has mandated HSBC, Credit Suisse First Boston (CSFB) and UBS to sell the bonds.
     The government's remaining external financing requirement for this year stood at about 680 mln usd after the pre-funding of most of it last year.
     (1 usd = 56.285 pesos)
     cecille.yap@afxasia.com

STOCK ALERT - Philippines' PLDT lower early on ADR fall

     MANILA (AFX-ASIA) - Philippine Long Distance Telephone Co (PLDT) was lower in early trade, tracking the sharp decline of its American Depositary Receipts in New York overnight, dealers said.
     At 9.32 am, PLDT was down 35.00 pesos, or 3.72 pct, at 905.00 on volume of 4,200 shares.
     Its ADRs fell 0.49 usd to 16.05 last night in line with the further falls of the Nasdaq and the Dow Jones Industrial Average.
     Dealers said bargain-hunting may have emerged at the current price level.
     (1 usd = 56.295 pesos)
     cecille.yap@afxasia.com

Manila shares outlook - Mixed to lower on Wall St fall, lack of fresh leads

     MANILA (AFX-ASIA) - Share prices will likely open mixed to lower as the market consolidates in the absence of fresh corporate leads, with sentiment undermined by Wall Street's fall overnight, dealers said.
     Yesterday, the 30-company composite index closed lower for the third day, down 0.08 points or 0.01 pct at 1,455.67 on volume of 163.99 mln shares worth 412.19 mln pesos.
     In the broader market, losers matched gainers at 15 each, while 47 stocks were unchanged.
     "The lack of new market developments and weakness in the US markets will keep investors sidelined. Political uncertainties due to the upcoming May elections will weigh on the market," BPI Securities said in its daily note to investors.
     Opposition presidential aspirant Fernando Poe Jr's plan to restructure the country's debts worried bond investors at a time when the government is working on borrowing at least 500 mln usd from the foreign bond market to finance its remaining requirement this year.
     The movie star is running neck and neck with incumbent president Gloria Arroyo in the six-man presidential race.
     Poe's political party explained the presidential hopeful intends to stretch out the amortization period of the country's debts and does not in any way plan to declare a moratorium should he be elected.
     This development prompted the central bank to issue a statement assuring creditors that the Philippines remains committed to honoring its debt obligations.
     Meanwhile, despite recent sluggish trades, BPI maintains its positive earnings outlook for Philippine companies in 2004, and advises investors to take the market's weakness as an opportunity to accumulate select issues.
     The market is seen supported at 1,435 and resistance is at 1,500.
     (1 usd = 56.235 pesos)
     cecille.yap@afxasia.com

Philippines' Ayala Land to develop property in Bonifacio Global City - report

     MANILA (AFX-ASIA) - Ayala Land Inc will start in April a five-hectare mixed-use property project within the Bonifacio Global City in metropolitan Manila, the BusinessWorld newspaper reported, quoting company president Francisco Licuanan.
     "In April we will start a project similar to what we did with the McKinley Business District. It will be a lots-only development with smaller lot sizes. It will be mixed-use and will be located near the schools," Licuanan was quoted to have said.
     He said the new development would compliment the company's other projects in the global city, including the 9.8-hectare Market! Market! shopping mall, a 12-hectare medium-rise residential area and the two-hectare mixed-used McKinley business district.
     Ayala Land, together with Evergreen Holdings, earlier acquired control of Bonifacio Land, developer of the global city.
     (1 usd = 56.235 pesos)
     cecille.yap@afxasia.com

Philippines scraps automated vote counts for May elections

     MANILA (AFX-ASIA) - Philippine election canvassers will manually count millions of votes after the May 10 general elections after officials decided today to abandon moves to automate the process amid fears of corruption.
     Benjamin Abalos, chairman of the Commission on Elections (Comelec) said his agency unanimously decided to drop proposals to use machines, raising the prospect of a prolonged count -- a process that has previously taken up to three months.
     "We do not want to add more to the growing apprehensions of people that we want to cheat in favor of the administration candidates," he said.
     In January, the Supreme Court struck down a government contract for vote-counting computer systems, preventing planned automation.
     Comelec's subsequent proposals to use automated counting in selected met with protests from opposition parties, who charge that the systems could be used to favor the party of incumbent President Gloria Arroyo.
     In the May 10 elections, about 38 mln voters are scheduled to choose a president for a six-year term. Surveys show that President Arroyo is in a dead heat in the race with opposition candidate Fernando Poe, a popular movie star.
     Voters will also pick a vice president, 12 senators, congressmen for their districts, as well as local executives.

Philippine movie star's party clarifies debt-restructuring statement

     MANILA (AFX-ASIA) - Opposition candidate Fernando Poe Jr will look into the possibility of asking creditors for longer periods to amortize the Philippines' debts if he wins the May 10 presidential poll, his political party said.
     The Philippines' total outstanding external debt stood at 56.3 bln usd as at end-Sept 2003, compared with 56.1 bln usd as at end-June.
     Poe's party, the Koalisyon ng Nagkakaisang Pilipino (Coalition of United Filipinos), said in a statement his proposal to study a possible restructuring of the public debt "pertains to 'stretching' of the amortization period to pay such obligations so that the interest payments deferred in meeting these debts could be tapped to bankroll programs to stimulate economic growth."
     Poe's statement on Tuesday on his debt-restructuring proposal prompted central bank governor Rafael Buenaventura to seek clarification of his stand on the issue.
     Buenaventura had warned that Poe's debt-restructuring pronouncements may be misconstrued as a call for debt repudiation, which will certainly not sit well with the international business community.
     Poe's campaign spokesman, Francis Escudero, said that, with more funds allocated for programs to drive the economy, the government will be able to improve its capacity to pay obligations to domestic and international creditors.
     "The debt restructuring, which the KNP is proposing, should not be equated with debt repudiation or a debt moratorium," Escudero said.
     "By debt restructuring, we mean stretching the amortization period for our debts, so that interest payments deferred on them can be channeled to projects that will spur economic growth, which, in turn, will improve the government's capacity to pay debts."
     Poe yesterday released a lengthy document, dubbed a "social covenant", on the things he intends to do for the country, if he wins in the May 10 poll.
     The movie star is running neck and neck with financial markets favorite incumbent Gloria Arroyo. However, his inexperience in politics and governance has raised doubts about his competence to run the country and manage an economy that has been running budget deficits for several years now.
     Central bank deputy governor Amando Tetangco, meanwhile, assured creditors that the Philippines remains committed to honoring its debt obligations.
     Poe's comments came at a time when the Philippines plans to issue at least 500 mln usd worth of global bonds due 2015.
     A government official said that the comments triggered a 19 basis points widening of spreads on the Philippines' 10-year debt notes to between 480 and 492 basis points above US Treasuries last night.
     The official added that investors were concerned that a debt restructuring, repudiation or moratorium may become an option under a Poe administration.
     "Suggestions about debt restructuring should be carefully studied. In looking at this option, it must be remembered that a meaningful and viable restructuring requires a voluntary, market-based approach," Tetangco said.
     "This means the decision to restructure debt is not the sole prerogative of the debtor nation and requires the consent of creditors."
     Tetangco, however, noted that the public sector's external debt is well spread out on average over the next 19 years, which makes the debt manageable at this time.
     "A further stretching of the maturity through market-based approaches could provide us with additional opportunities to achieve growth in the long run," he said.
     "This will further enhance our capacity to pay our way out of indebtedness."
     He echoed what other Philippine economic managers have been saying -- that a fundamental element to any debt reduction program is fiscal consolidation.
     The current administration aims to balance the budget by 2009 under its fiscal consolidation program.
     "The challenge for government is to increase revenues and rationalize expenditures to reduce the need for additional debt," Tetangco said.
     "A sustainable medium-term consolidation program will also enhance market confidence, which would encourage non-debt creating flows into the Philippines and, in turn, lessen the country's debt dependence."
     edelacruz@afxasia.com

Philippines' PLDT chairman opposes proposed tax on text messaging

     MANILA (AFX-ASIA) - Philippine Long Distance Telephone Co chairman Manuel Pangilinan said he does not support a proposal to tax text messaging even if he was one of the top three business leaders who endorsed the recommendation to candidates in the May 10 presidential election.
     Pangilinan said he only deferrred to the consensus of the majority who drafted the 2004 Presidential Business Agenda, a comprehensive list of what business leaders believe a new president should undertake once in office.
     "You can't kill the goose that lays the golden egg," Pangilinan said.
     There are more than 22 mln cellular phone subscribers in the country sending as many as 170 mln text messages daily. Phone firms charge at least 1. 00 peso per message sent.
     Simulations by the finance department showed a five pct tax on text messaging should boost government revenues by 8.5 mln pesos a day or more than three bln pesos a year.
     "I would rather keep quiet but I am not going to support it. That was the consensus of the group," Pangilinan said.
     Other proposals in the business agenda include legalization of an illegal numbers game called jueteng, an increase in fuel taxes and restructuring of the country's debt.
     The proposal to tax text messaging has gained the support of the International Monetary Fund as an innovative measure to raise revenues and address the widening budget deficit.
     (1 usd = 56.235 pesos)
     afxmanila@afxasia.com

Philippine Treasury to open 1.0 bln pesos tap window for 3-year T-bonds

     MANILA (AFX-ASIA) - The Bureau of Treasury said it will open tomorrow the tap facility window for 1.0 bln pesos worth of three-year T-bonds auctioned yesterday.
     Placements via the tap window will be accepted only between 9 am and 11 am tomorrow on a pro-rata basis, the Treasury said in a notice to government securities dealers.
     The government raised 740 mln pesos at yesterday's auction of three-year T-bonds against total tenders of 8.51 bln pesos and an offering 3.0 bln pesos.
     The coupon rate is 11.0 pct, and yield to maturity is 11 pct.
     (1 usd = 56.235 pesos)
     edelacruz@afxasia.com

Philippines' Arroyo approves duty-free imports of pork, feeds

     MANILA (AFX-ASIA) - President Gloria Arroyo has approved duty-free imports of pork, as well as corn and soya feeds, to help stabilize meat prices, which have gone up recently due to a supply shortage.
     The government will allow zero-tariff imports of 5,000 tons of pork and 350,000 tons of corn for pig farms, besides also allowing for zero duty on soya feeds, she added.
     The decision is based on the proposal of the cabinet committee on tariff-related matters.
     Meat dealers recently staged a three-day "pig" holiday to protest against the rising costs of meat products at the farm-gate level, largely attributed to higher prices of feed products.
     The president recently approved tariff reductions and duty-free imports of certain vehicle parts to lower operating costs of public utility vehicles and buses, operators of which have been pressing for fare hikes.
     Arroyo said she will issue an executive order to cover the duty-free imports because Congress is in recess ahead of the May 10 general elections.
     The Philippine Constitution gives the president legislative authority to grant tariff reductions through executive orders.
     cecille.yap@afxasia.com

Philippines' 500 mln usd global bonds due 2015 rated BB - S&P

     MANILA (AFX-ASIA) - Standard & Poor's Ratings Services has assigned a BB debt rating for the Philippines' soon-to-be-issued 500 mln usd, or higher, global bonds due 2015.
     In a statement, S&P said the sovereign credit rating is supported by the country's adequate external liquidity, with total debt servicing projected at 37 pct of current account receipts this year, or similar to that of rated peers.
     It, however, noted as a major concern the country's budget deficit and growing dependence on foreign debts.
     "The central government deficit is likely to remain relatively high at about 4 pct of GDP by (the) government's definition this year, compared with 4.3 pct in 2003, due largely to weak tax collection," S&P credit analyst Takahira Ogawa said.
     Ogawa said the Philippines' narrow tax base contributes to weak public finances. Tax revenues as a share of GDP have fallen more than three percentage points since 1997 due to weak revenue collection. He, however, noted some improvements were made last year.
     S&P also noted the government's increasing debt levels compared to other similarly-rated sovereigns. General government debt, excluding amounts guaranteed by the government and lent to government-owned and controlled corporations, approached 90 pct of GDP this year, higher than the median level of 51 pct for other sovereigns.
     Interest payments will amount to about 37 pct of government revenue this year from 22 pct in 1999.
     The weak fiscal profile and shallow domestic capital markets are resulting in continued dependence on external capital to accelerate economic growth, making Philippine financial markets more vulnerable to adverse external developments and constraining macroeconomic stability, S&P said.
     "The growing difficulty in implementing ambitious structural reforms and (the) tough operating environment in the energy sector, as well as delays in restructuring some public sector enterprise, such as the National Power Corp, raises the likelihood of the government having to assume more of these entities' debt in the coming years," Ogawa said.
     cecille.yap@afxasia.com

Philippine Meralco seeks ERC approval for 0.16 peso/kwh generation rate hike

     MANILA (AFX-ASIA) - Manila Electric Co (Meralco) said it filed yesterday with the Energy Regulatory Commission (ERC) its second GRAM (Generation Rate Adjustment Mechanism) application for a new generation charge of 3.4583 pesos per kilowatthour, 0.16 peso higher than the previous GRAM filing.
     It said the new petition covers the cost of generation for the Oct-Dec 2003 period.
     The GRAM is a cost-recovery mechanism the ERC put in place under guidelines released in Feb 2003.
     "For (the October-December) period, the average generation cost increased 0.16 peso per kWh from the average in the previous GRAM filing. This was the result of NPC's (state-owned National Power Corp) implementation of its Long-Run Avoidable Cost-based rates.
     Meralco said in a statement that NPC, which handles over half of its supply, increased its rates by around 0.50 peso per kWh during the period covered in its recent filing with the ERC.
     "The delayed recovery of generation cost due to the GRAM resulted in under-recoveries of 785 mln pesos for the period, which will be recovered over six months from May-Oct 2004 billings at 0.06 peso per kWh monthly," Meralco said.
     "Over-recoveries in the past GRAM approval, likewise spread over a six-month period from February to July at close to 0.06 peso per kWh, were adjusted downwards by 0.05 peso to reflect the difference in the use of supply and billing month kilowatthour volumes in computing the monthly recoverable generation cost."
     Meralco said it will collect the new generation charge from May 1 after the ERC approval is received.
     "We would like to emphasize that this is revenue-neutral insofar as Meralco is concerned since this is merely a pass-through charge," said Elpi Cuna, the company's vice-president for corporate communications.
     (1 usd = 56.20 pesos)
     edelacruz@afxasia.com

Philippines to reduce budget deficit to 188 bln pesos in 2005 - source

     MANILA (AFX-ASIA) - The Philippines plans to further reduce its budget deficit to roughly 188 bln pesos next year from this year's target of 197.8 bln pesos, a government source said.
     The Cabinet-level inter-agency Development Budget Coordination Committee (DBCC) has agreed to bring down the 2005 deficit target to 3.7 pct of gross domestic product (GDP) from 4.2 pct this year.
     The government is targeting to balance the budget by 2009.
     The budget deficit of 16.12-bln pesos in January was well within expectations, the finance department said. It is still finalizing its quarterly fiscal program.
     (1 usd = 56.195 pesos)
     cecille.yap@afxasia.com

Philippines offering 10 geothermal areas for public bidding - energy chief

     MANILA (AFX-ASIA) - The Philippines has opened for public bidding 10 "highly prospective" geothermal areas nationwide in a bid to develop the country's geothermal energy resources, Energy Secretary Vincent Perez said.
     The Philippines is the world's second largest producer of geothermal energy next to the US, with an installed generating capacity of 1,932 megawatts.
     "To firm up our long-term objective of becoming the world leader in geothermal energy development, 10 prospective areas for expansion of existing geothermal fields and exploration and development of new projects will be offered to interested investors. These areas were painstakingly and prudently selected based on technical, environmental and legal merits," Perez said in a statement.
     The Philippines has identified 35 geothermal resource areas with an estimated potential generating capacity of 4,137MW, enough to cover the required 1,200MW additional capacity the government is targeting over a 10-year period.
     The energy department has identified the 10 promising geothermal fields in the country, which could generate as much as 300-470MW in additional capacity.
     The areas are Manito-Bayabon and Rangas-Tanawon in Sorsogon, Biliran in Eastern Visayas, Amacan in North Davao, Dauin in Negros Occidental, Natib in Bataan, Mabini in Batangas, Montelago in Oriental Mindoro and Mt Kabalian in Leyte.
     Perez said at least six companies have already expressed interest to take part in the geothermal bidding round.
     Existing geothermal power producers in the country are state-owned PNOC-Energy Development Corp (PNOC-EDC), US firm Unocal unit Philippine Geothermal Inc, California Energy and Ormat Inc.
     Interested companies have five months from today to evaluate the geothermal potentila of the areas named.
     They will have until July 30 this year to submit their bids.
     Early this month, the energy department closed the first Philippine petroleum contracting round (PCR-1) under which new exploration blocks near oil and gas discoveries were offered for public bidding.
     Several international oil firms made interest to explore the country's oil and gas fields and their applications are now being evaluated.
     The contracts ay be awarded in May, the energy department said.
     cecille.yap@afxasia.com

Easycall Philippines trading suspension to be lifted March 11 - PSE

     MANILA (AFX-ASIA) - Trading in Easycall Communications Philippines Inc shares will resume tomorrow (March 11) after the Securities and Exchange Commission (SEC) approved its capital restructuring plan, the Philippine Stock Exchange said.
     The exchange suspended trading in Easycall shares from Dec 22 at the company's request pending SEC approval of its restructuring plan, which has the aim of addressing its capital deficiency.
     The company is to undertake a stock split to reduce its authorized capital stock to 60 mln shares from 300 mln and increase the face value of its shares to 5.00 pesos each from 1.00.
     As a result, Easycall said earlier, its issued and outstanding capital stock of 159.52 mln shares, with nominal value of 1.00 peso per share, will be replaced by 31.9 mln new shares with a face value of 5.00 pesos per share, keeping its total outstanding capital at 159.52 mln pesos.
     After the stock split, the par value will then be reduced to 1.00 peso per share from 5.00 pesos for both the authorized capital of the 60 mln shares and the issued and outstanding shares of 31.9 mln shares.
     The reduction in nominal value will result in a surplus of 127.61 mln pesos to be recognized in the company's books.
     The surplus will then be used to offset the company's deficit, which will be reduced to 70.27 mln pesos from 197.88 mln as of last June.
     (1 usd = 56.20 pesos)
     edelacruz@afxasia.com

Manila shares close flat on lack of leads

     MANILA (AFX-ASIA) - Share prices closed flat after a sluggish session as investors stayed out of the market in the absence of fresh trading incentives ahead of the May 10 presidential elections, dealers said.
     The 30-company composite index closed down 0.08 points, or 0.01 pct, at 1, 455.67 on volume of 163.99 mln shares worth 412.19 mln pesos and off a low of 1,450.73 and below a high of 1,457.01.
     In the broader market, losers matched gainers at 15 each, while 47 stocks were unchanged.
     Top-traded Philippine Long Distance Telephone Co closed unchanged at 940. 00 on 209,920 shares from earlier declines.
     Dealers said the market historically trades sideways to lower months ahead of an election due to uncertainties on the outcome.
     However, the mood is expected to turn bullish as investors and the new administration enter the so-called "honeymoon" period.
     Dealers said opposition presidential candidate Fernando Poe Jr's statement that he will consider restructuring the country's sovereign debts should he win the presidency may have also served as another disincentive to trade.
     The debt-restructuring proposal comes at a time when the government is in the international debt market for this year's foreign financing requirements.
     Poe, who is running neck and neck with incumbent Gloria Arroyo, said he also intends to "re-orient the government's policy on globalization to focus on pushing for expanded markets for our products and protecting vulnerable sectors from unfair competition."
     "That was a controversial statement on a very sensitive issue and it needs to be clarified," Regina Capital Development analyst Gomer Tan said.
     Central bank governor Rafael Buenaventura has said Poe should clarify his position on the country's debt problem, as his comment may be misinterpreted as a call for debt repudiation.
     He said it is important creditors be "kept comforted" that the Philippines will meet its obligations.
     DA Market Securities president Nesto Aguila said investors are already in a holiday mood, ahead of the Easter break early next month and the May elections. At the same time, the market is awaiting more earnings reports.
     "Historically, the market is (on a) dead (mode) towards an election, but it comes back to life immediately after," Aguila said.
     Second most active Globe Telecom shed 10.00 pesos to 860.00 on 54,680 shares.
     Ayala Corp gained 0.10 to 6.10 on 7.5 mln shares, while Ayala land lost 0. 10 to 5.40 on 905,000 shares.
     Pilipino Telephone Corp was up 0.10 at 1.70 on 13.56 mln shares on bargain-hunting after recent falls.
     Mabuhay Vinyl was up 0.02 at 1.16 on 7.5 mln shares.
     Jollibee was down 0.50 at 17.75 at 386,800 shares.
     First Holdings was down 0.25 at 23.50 on 219,000 shares.
     The all-shares index was down 0.05 points at 936.52.
     The commercial-industrial index recovered from an earlier decline to close up 1.32 at 2,270.69.
     Property was down 0.91 at 516.90.
     Mining was up 7.29 at 1,489.18.
     Oil was unchanged at 1.23, as was finance at 430.81.
     (1 usd = 56.195 pesos)
     cecille.yap@afxasia.com

STOCK ALERT - Philippines' Piltel firmer on bargain-hunting

     MANILA (AFX-ASIA) - Pilipino Telephone Corp was firmer mid-session as investors sought bargain stocks in an otherwise sluggish market, dealers said.
     Top-traded Piltel was up 0.04 peso, or 2.41 pct, at 1.70 on volume of 22. 02 mln shares.
     Dealers said charts suggest Piltel has neared its oversold level, prompting market technicians to recommend a "buy" on the stock.
     Resistance is seen at 1.84 pesos.
     Piltel reported that it dramatically narrowed its net loss last year to 3. 35 bln pesos from 21.83 bln in 2002 on the back of its wireless business' substantial growth.
     As of end-2003, the total subscriber base of Piltel's wireless brand Talk 'N Text stood at 2.87 mln, up 62 pct from 1.77 mln at the end of the previous year.
     The company said it is looking forward to a continued recovery this year. The recovery plan it submitted earlier to the stock exchange showed it expects to return to profitability this year, with an earnings forecast of 402.4 mln pesos.
     (1 usd = 56.313 pesos)
     cecille.yap@afxasia.com

Philippines' AJO.net to sell Metroclub membership certificates to Philtown

     MANILA (AFX-ASIA) - AJO.net Holdings Inc said it has agreed to sell 488 membership certificates in Metropolitan Club Inc (Metroclub) to Philippine Townships Inc (Philtown) for 166,332 pesos each or 81.17 mln pesos.
     The transaction is however subject to the fulfillment of certain conditions, foremost of which is the satisfactory completion by Philtown of the purchase of a 2,000-square meter land from Metroclub and the reclassification of that land.
     Formerly Acoje Oil Exploration and Drilling Company Inc, AJO.net Holdings, was engaged in the oil exploration business before it became a holding company, allowing it to invest in real estate in 1996.
     The change to its present name reflects the company's decision to venture into internet technology. Recently, it amended its articles of incorporation by including e-commerce among its secondary purposes.
     (1 usd = 56.22 pesos)
     edelacruz@afxasia.com

STOCK ALERT - Philippines' PLDT slightly lower early on ADRs' fall

     MANILA (AFX-ASIA) - Philippine Long Distance Telephone Co (PLDT) sustained its losing streak in early trade following the decline of its American Depositary Receipts (ADRs) in New York last night, dealers said.
     Second most active PLDT shed 5.00 pesos at 935 on 6,480 shares so far.
     Its New York-traded ADRs ended 0.07 usd lower at 16.54 per share last night in line with Wall Street's two-day weakness.
     (1 usd = 56.219 pesos)
     cecille.yap@afxasia.com

Philippine Premiere Entertainment, Next Mobile in share swap deal

     MANILA (AFX-ASIA) - Premiere Entertainment Productions Inc (PEP) said it has entered into a share swap agreement with shareholders of Next Mobile Inc (NMI), which will result in PEP owning and controlling 97 pct of NMI.
     NMI shareholders are Top Mega Enterprises Ltd, Joycelink Holdings Ltd, Gamboa Holdings Inc, Emerald Investments Inc, and Foodcamp Industries and Marketing Inc.
     The NMI shareholders, on the other hand, shall own and control a total of 96.2 pct of PEP's outstanding capital stock after the swap.
     PEP, in a disclosure to the stock exchange, said NMI shareholders shall assign to PEP some 13.56 mln NMI common shares in exchange for the issuance by PEP of 13.16 bln common shares.
     PEP stressed that NMI and the NMI shareholders are not related parties of PEP and its major shareholders.
     The assignment of NMI shares and issuance of PEP shares will take place on or before Oct 21 this year, subject to the fulfillment of certain closing conditions, such as the issuance by the Bureau of Internal Revenue of a tax opinion finding the transaction to be tax-deferred, as well as to regulatory approvals.
     Next Mobile manages and operates the Nextel Radio-Phone Network.
     Premiere previously engaged in movie production.
     edelacruz@afxasia.com

Philippines' Republic Glass approves corporate life extension for 50 yrs

     MANILA (AFX-ASIA) - Republic Glass Holdings Corp said its board of directors has unanimously approved a resolution extending the corporation's life for another 50 years.
     The resolution will be submitted to shareholders at their next regular meeting, the date of which was not specified in the company's disclosure to the stock exchange.
     Republic Glass is the sole manufacturer and dominant supplier of flat glass, and is involved in the business of a holding company such as purchasing, leasing and selling securities, business and properties of every kind.
     The company was incorporated in 1956 and has developed a lucrative and growing foreign market for its products, which includes the US, Singapore and Indonesia.
     edelacruz@afxasia.com

Philippine central bank tightens rules on banks' loans to related interests

     MANILA (AFX-ASIA) - The central bank has tightened the guidelines on banks' dealings with their directors, officers, stockholders and related interests (DOSRI) to prevent abuses that could lead to bank failures.
     The central bank said its policy-making Monetary Board has expanded the coverage of DOSRI lending and has also set stiffer sanctions against violators with its approval of the implementing guidelines for Section 36 of the General Banking Law of 2000, which limits DOSRI exposure.
     Under the new guidelines, related interests are now defined as "a corporation, association or firm which owns or controls directly or indirectly whether singly or as part of a group of related interests at least 20 pct of the subscribed capital of a substantial stockholder of the lending bank or which control majority interest of the bank."
     Also covered under the definition is a "corporation, association or firm in which the lending bank and/or its parent/subsidiary holds or own at least 20 pct of the subscribed capital of such corporation, or equity of such association, or has an existing management contract or any similar arrangement with the lending bank or its parent/ subsidiary."
     Sanctions that may be imposed in case of violation include prohibiting the erring bank from declaring dividends with the prescribed ceiling on DOSRI until the outstanding loans and other credit accommodations have been reduced with the prescribed ceiling.
     The office of any bank director or officer who violates the guidelines may be declared vacant after due notice to the board of directors. The erring director or officer shall be subject to the penal provisions of the New Central Bank Act.
     "The new guidelines expanding the coverage of DOSRI limits represent a major initiative that will improve the quality of corporate governance, bolster the domestic capital market, and free up credit to small and medium-sized borrowers. By curbing excessive related party lending, a major cause of bank failure will be more effectively limited," central bank governor Rafael Buenaventura said.
     Under the General Banking Law, each bank's DOSRI exposure shall not exceed 15 pct of its total loan portfolio or 100 pct of its net worth, whichever is lower.
     cecille.yap@afxasia.com