NEWS

Philippines March CPI seen up 3.6 pct yr-on-yr vs 3.4 pct in Feb - Neri

     MANILA (AFX-ASIA) - Higher oil prices and a weaker peso will likely push the Philippines' headline consumer price index (CPI) up 3.6 pct year-on-year in March from 3.4 pct in February, based on the 1994 price series, Economic Planning Secretary Romulo Neri said.
     "Inflation rate could moved up to 3.6 pct because of the combined effects of the peso depreciation and the series of oil price increases," he said.
     Neri, however, remains confident that full-year inflation will settle within the 4.0-5.0 pct range targeted by the government, despite the expected acceleration in consumer price increases in months before the May 10 presidential elections.
     The peso closed today at 56.425 to the US dollar, near its record low of 56.45.
     afxmanila@afxasia.com

Philippines' Ayala not keen on acquiring Maynilad water concession

     MANILA (AFX-ASIA) - Ayala Corp, whose unit Manila Water Inc supplies drinking water to metropolitan Manila's east zone, is not interested in taking over west zone supplier Maynilad Water Services Inc, Ayala's executive managing director said. "We would like to concentrate on what we have. It is best for Maynilad to find their own investors so the work needed could be done on parallel tracks, Fernando Zobel de Ayala told the annual shareholders' meeting.
     After taking back control of Maynilad from the Lopez family's Benpres Holdings Corp, the government plans to privatize the water utility again by 2009, a local newspaper reported early this week, citing an unidentified government official.
     About seven years after winning the concession, Benpres has decided to write off its equity participation in Maynilad, which is to be taken over by regulator Metropolitan Waterworks and Sewerage System (MWSS) under a Maynilad reorganization agreement. Benpres currently owns 60 pct of Maynilad, while France's Suez Group holds about 40 pct.
     After the reorganization, which is still subject to regulatory and court approvals, Maynilad will be 39 pct owned by MWSS, 19.0 pct by Suez Group, 2.0 pct by creditor Metropolitan Bank and Trust Co and 4.0 pct by Maynilad employees.
     Manila Water, which plans to go public by 2005, more than doubled its net profit in 2003 to 1.2 bln pesos.
     Zobel said that despite the progress achieved by Manila Water, the company is still faced with an enormous challenge in terms of reducing system losses due to pilferage and leakage.
     Meanwhile, Ayala Corp remains confident that net profit this year will exceed the 2003 level of 3.1 bln pesos, as its units are in strong shape to continue delivering strong earnings.
     Ayala Corp's other units are Ayala Land Inc, Bank of the Philippine Islands, Globe Telecom Inc, Integrated Microelectronics Inc and Ayala Automotive Inc. All had banner years in 2003 in terms of earnings.
     Ayala Corp president and chief executive officer Jaime Augusto Zobel de Ayala said the company also expects first quarter earnings to exceed the year-earlier level of 656 mln pesos.
     "We're tracking ahead of last year and I see no reason why we would not track ahead by the end of the year," he said.
     (1 usd = 56.43 pesos)
     afxmanila@afxasia.com

Philippines' San Miguel starts chicken exports to Japan's Yonekyu

     MANILA (AFX-ASIA) - San Miguel Corp said it is now exporting its poultry products to Japan, with the second shipment of 21 metric tons expected to arrive there soon following a shipment of 6.8 metric tons early this month.
     The Philippines' food and beverage conglomerate said it recently signed a deal with Japanese meat-packing company Yonekyu Corp for an export of 28 metric tons of de-boned cut-up chicken parts.
     San Miguel said it is negotiating with Yonekyu for the third shipment, with volume still undetermined, adding that the Japanese firm has expressed interest in establishing a long-term business relationship with San Miguel.
     San Miguel did not disclose financial details.
     San Miguel and Yonekyu have Kirin Brewery Company as their common major shareholder. Kirin holds 15 pct and 20.1 pct in San Miguel and Yonekyu, respectively.
     Yonekyu, which earned 111 bln yen in revenues in 2003, has eleven production sites in Japan, two in China and one in the US, according to San Miguel.
     Japan has decided to import poultry from other Asian markets as its traditional suppliers - China and Thailand - were hit hard by the avian flu virus.
     Despite the bird flu outbreak in Asia, the Philippines has remained free of the virus.
     "The company considers the export as a breakthrough for (Philippine) poultry since the Japanese market is known for its stringent quality standards," San Miguel said in a statement.
     afxmanila@afxasia.com

Manila shares close marginally lower amid pre-election jitters

     MANILA (AFX-ASIA) - Share prices closed marginally lower in another sluggish session on investor caution over growing political uncertainties ahead of the May 10 presidential elections, dealers said.
     Investors stayed on the sidelines ahead of the weekend and kept an eye on the currency market as the peso again traded near its record low of 56.45 to the US dollar this morning.
     The composite index closed down 2.20 points, or 0.16 pct, at 1,390.92 on volume of 590.8 mln shares worth 651.2 mln pesos, with cross sales accounting for 334.3 mln. It traded between 1,387.77 and 1,396.05.
     In the broader market, losers led gainers 31 to 10, while 40 stocks were unchanged.
     "The market will remain bearish as election day draws closer. More market participants are expected to stay on the sidelines ahead of the Easter break (in early April)," said Elena Ponceca, research head at Unicapital Securities.
     The market was largely expected to rise this morning on extended bargain-hunting following Wall Street's overnight gains, but Ponceca said investors are now focused on domestic political issues.
     "The Philippine market is one of the only two that saw price declines this morning. We can't say this early if we're really bucking the trend now after tracking regional and other major markets previously," said Andrew Long, research head at ATR-Kim Eng Securities.
     He noted that 1,400 points appear to be a very strong resistance level.
     Ponceca said trading next will likely remain weak, although some bargain-hunting is possible given that some stocks are near or already at oversold levels.
     Mall operator SM Prime Holdings was top-traded on 31.9 mln shares, but unchanged at 5.60 pesos.
     Ayala Land Inc was down 0.15 at 4.95 on 14.5 mln shares, while parent Ayala Corp was unchanged at 6.10.
     Philippine Long Distance Telephone was unchanged at 900, while rival Globe Telecom was up 5.00 at 800.
     Trans-Asia Oil and Energy Development Corp was up 0.01 at 0.93 on 41.4 mln shares, almost all of which were cross sold.
     Manila Electric B, available to foreign investors, was down 1.00 at 25, while Meralco A fell 0.50 to 16.50.
     PLDT affiliate Pilipino Telephone was down 0.02 at 1.64, giving back some of early gains made on its expected return to profit this year and easing concerns about its debts, which affiliate Smart Communications Inc intends to absorb.
     The all-shares index was up 14.63 points at 911.67.
     The commercial-industrial index fell 2.89 to 2,174.58.
     Property dropped 6.64 to 487.63, while mining retreated 9.37 to 1,396.26.
     Oil was unchanged at 1.12.
     Banking and financial services advanced 1.14 to 418.05.
     (1 usd = 56.43 pesos)
     afxmanila@afxasia.com

Philippines' Jollibee makes initial payment of 11.5 mln usd for Yonghe King

     MANILA (AFX-ASIA) - Jollibee Foods Corp said it has made an initial payment of 11.5 mln usd for its acquisition of an 85 pct stake in Belmont Enterprises Ventures Ltd, which operates the Yonghe King restaurant chain in China.
     Jollibee has agreed on an acquisition price of 22.5 mln usd for Yonghe King.
     In a disclosure to the stock exchange, Jollibee said the parties concerned have satisfied all conditions set under the sale-and-purchase agreement.
     Jollibee, the Philippines' largest fast-food chain operator, said the 85 pct stake in Belmont has been transferred to wholly-owned unit Jollibee International (BVI) Ltd.
     Jollibee looks at the Yonghe King acquisition as an opportunity to become a major player in the quick service restaurant business in Asia.
     Yonghe King operates 77 stores -- 26 in Shanghai, 26 in Beijing, 11 in Shenzhen, eight in Wuhan and six in Hangzhou. Its total sales reached 24 mln usd in 2003.
     Yonghe Group's founders, Lin Yu Au and Lee Yu Lin, who are Belmont's chief executive officer and head of marketing and public relations, respectively, have retained the remaining 15 pct equity interest and will continue working for the company.
     Under the sale-and-purchase agreement, Jollibee will pay a bonus to the sellers within the next three years, if a certain profit after tax level is achieved. This will take the maximum price, including initial capital, to 22. 5 mln usd.
     Jollibee earlier said half of the initial price would be paid using the company's surplus cash, while the balance would be paid by tapping external sources.
     Jollibee had 988 stores worldwide as of end-2003. With the acquisition of Yonghe King, its total number of stores will rise to 1,065.
     It currently operates stores in the US, Hong Kong, Brunei, Indonesia and a few other countries.
     (1 usd = 56.43 pesos)
     afxmanila@afxasia.com

Manila shares slightly lower amid pre-election political concerns

     MANILA (AFX-ASIA) - Share prices were down slightly mid-session on investor caution over growing political uncertainties in the run-up to the May 10 presidential elections, dealers said.
     Investors were largely on the sidelines and watching the currency market closely as the peso was again trading near its record low of 56.45 to the US dollar.
     At 11.20 am, the composite index was down 4.91 points, or 0.35 pct, at 1, 388.21 on volume of 458.6 mln shares worth 299.3 mln pesos, with cross sales accounting for 127.1 mln. It has so far traded between 1,388.21 and 1,396.05.
     In the broader market, losers were leading gainers 23 to 11, while 32 stocks were unchanged.
     "The market will continue to be bearish as election day draws closer. More market participants are also expected to stay on the sidelines ahead of the Easter break (in early April)," said Elena Ponceca, research head at Unicapital Securities.
     Top-traded Trans-Asia Oil and Energy Development Corp was up 0.01 at 0.93 on cross sales worth 41.0 mln pesos.
     Mall operator SM Prime was down 0.10 at 5.50.
     Globe Telecom was down 5.00 at 790.
     Ayala Land was down 0.15 at 4.95.
     Philippine Long Distance Telephone was unchanged at 900.
     (1 usd = 56.43 pesos)
     afxmanila@afxasia.com

STOCK ALERT - Philippines' Piltel up on earnings prospect, easing debt concern

     MANILA (AFX-ASIA) - Pilipino Telephone Corp was higher mid-session on its expected return to profitability this year and easing concerns about its debts, which affiliate Smart Communications Inc intends to absorb, dealers said.
     Piltel was up 0.02 peso, or 1.20 pct, at 1.68 on volume of 4.69 mln shares.
     Philippine Long Distance Telephone Co (PLDT) chairman Manuel Pangilinan said at a bankers' gathering that Piltel, in which PLDT has a 45 pct stakes, is on track with its goal to swing to profitability from this year.
     Piltel had dramatically narrowed its net loss last year to 3.35 bln pesos from 21.83 bln in 2002, after posting substantial growth in the revenue of its Talk 'N Text wireless business.
     Piltel, which has seen booked losses since 1997, when the Asian crisis saw its US dollar debt swell to aggravate worsening operating problems, expects to post a net profit of 402.4 mln pesos for 2004.
     Smart, PLDT's highly-profitable and wholly-owned wireless unit, intends to acquire its parent's stake in Piltel and has offered to take over Piltel's debt.
     The transaction is seen paving the way for a merger between Smart and Piltel, which will facilitate Sth former's backdoor-listing.
     Under its franchise agreement, Smart has until August to offer its shares to the public.
     Pangilinan said acquiring Piltel, with its accumulated tax benefits, will likely see Smart's profit grow 1.0-2.0 bln pesos per year.
     (1 usd = 56.43 pesos)
     afxmanila@afxasia.com

STOCK ALERT - Philippines' PhilWeb sharply firmer on speculative play

     MANILA (AFX-ASIA) - PhilWeb Corp was sharply higher in early trade on speculative interest and after chairman Roberto Ongpin's acquisition of 14.37 bln shares, representing 22.6 pct of the company, from the Cabarrus group, dealers said.
     PhilWeb was up 0.002 peso, or 18.18 pct, at 0.013 on volume of 292.0 mln shares.
     The interest in PhilWeb, the country's leading integrated Internet firm, was likely given a further boost from some local newspaper reports that Hong Kong-based gambling mogul Stanley Ho has re-entered the Philippines' gaming business.
     One report even said it may be Ho who actually acquired the Cabarrus group shares in PhilWeb, which recently bagged a deal to operate Internet sports betting and Internet casinos of state-run Philippine Amusement Gaming Corp (PAGCOR).
     In a disclosure to the stock exchange yesterday, PhilWeb said Ongpin's companies, Azurestar Corp and Aquadisk Corp, acquired the PhilWeb shares through a cross transaction on the Philippine Stock Exchange yesterday at 0. 011 peso each.
     The acquisition price is the average of the closing prices for the past 30 days.
     The Cabarrus group was the original controlling shareholder of mining firm South Seas Natural Resources Inc, the predecessor of PhilWeb.
     The TODAY newspaper reported that Ho has re-entered the Philippine gambling scene with his interests in a number of casino businesses here.
     Ho, who operates casinos in Macau, had plans to open a floating restaurant in Manila, which he brought to the Philippines in 1999, but did not proceed due to protests from religious groups.
     (1 usd = 56.43 pesos)
     afxmanila@afxasia.com

STOCK ALERT - First Philippine Holdings firmer after 2003 results

     MANILA (AFX-ASIA) - First Philippine Holdings Corp was higher after announcing a 3.824 bln pesos in net profit for the full year to Dec 2003, dealers said.
     The company did not provide a comparative figure, but it earlier reported a 2002 net profit of 1.96 bln pesos.
     First Holdings was up 0.25 peso at 20 on 82,500 shares.
     In an interview earlier with AFX-Asia, First Philippine Holdings president and chief operating officer Elpidio Ibanez said higher earnings contributions from the company's power generation business boosted its 2003 net profit.
     The company, which holds the Lopez family's energy-related businesses, as well as real estate and toll way construction operations, plans to resume dividend payments in the second half of this year.
     (1 usd = 56.43 pesos)
     afxmanila@afxasia.com

Philippine Filinvest Land to list additional 856.72 mln shares March 29 - PSE

     MANILA (AFX-ASIA) - Property developer Filinvest Land Inc (FLI) will list an additional 856.72 mln common shares on Monday, March 29, a Philippine Stock Exchange (PSE) circular said.
     The shares cover a property-for-share swap transaction involving FLI and units Filinvest Development Corp and Filinvest Alabang Inc.
     Under a Deed of Exchange executed on Nov 29, 1996, the units were to assign all rights, title, and claims over certain parcels of land to FLI in exchange for the latter's common shares.
     Filinvest Development and Filinvest Alabang will get 42.2 mln and 420.87 mln FLI common shares, respectively, under the transaction.
     The PSE said that the 85 pct stock dividend shares of the swap shares, totalling 393.63 mln FLI common shares, which the exchange approved on Aug 19 last year, will be simultaneously listed with the swap shares.
     (1 usd = 56.43 pesos)
     afxmanila@afxasia.com

Philippine govt to issue 200 mln usd zero-coupon bonds - report

     MANILA (AFX-ASIA) - The national government is set to issue 200 mln usd worth of zero-coupon bonds to raise funds - ahead of the May 10 presidential elections - for its budgetary requirements, the Philippine Star reported, citing unidentified sources.
     HSBC has been mandated to underwrite the issue, the report said.
     Yesterday, the central bank said it is inclined to delay its own 500 mln usd borrowing plan so that other Philippine borrowers, including state-owned National Power Corp (Napocor), will be given priority in the international market.
     Napocor is set to borrow 200 mln usd in the international market, with the plan already approved by the central bank's Monetary Board.
     It has mandated Barclays to assist it in the fund raising, which is to partly finance its funding requirements for this year totalling 1.5-1.8 bln usd.
     Napocor is also finalizing the sale of 5.0 bln pesos worth of zero-coupon bonds, and has tapped ING Bank for this issuance.
     The reported new borrowing by the national government comes after the release early this week of end-February budget deficit figures.
     The deficit widened to 34.6 bln pesos as at end-February from 16.1 bln as at end-January. In February alone, government revenues were 18.4 bln pesos lower than expenditures.
     The government aims to limit the deficit at 58.9 bln pesos by end-March, in line with its goal to limit the full-year deficit to 197.8 bln, or about 4. 2 pct of the gross domestic product.
     (1 usd = 56.41 pesos)
     afxmanila@afxasia.com

Philippines' MWSS to borrow 150-200 mln usd for loan refinancing - report

     MANILA (AFX-ASIA) - State-run Metropolitan Waterworks and Sewerage System (MWSS) plans to borrow 150-200 mln usd to finance its maturing obligations in the second quarter, the Philippine Star reported.
     The central bank's Monetary Board has approved the MWSS borrowing plan, the report said, citing central bank deputy governor Amando Tetangco Jr.
     (1 usd = 56.41 pesos)
     afxmanila@afxasia.com

Philippine govt end-Jan outstanding debt 3.41 trln pesos vs 2.88 trln yr-ago

     MANILA (AFX-ASIA) - The national government's outstanding debt swelled to 3.41 trln pesos as of end-January from 2.88 trln a year earlier, data from the Bureau of Treasury showed.
     The government's domestic loans as of end-January amounted to 1.74 trln pesos, up from 1.48 trln a year earlier, while foreign borrowings were equivalent to 1.67 trln pesos, up from 1.39 trln a year earlier.
     The government as of end-January had a contingent debt of 713.22 bln pesos, representing guarantees provided for loans of government-owned and controlled corporations and government financial institutions.
     (1 usd = 56.41 pesos)
     afxmanila@afxasia.com

Philippines' Aboitiz unit wins first round of bidding for govt power plants

     MANILA (AFX-ASIA) - The government's Power Sector Assets and Liabilities Management Corp (PSALM) has declared Hydro Electric Development Corp, a unit of Aboitiz Equity Ventures, the winning bidder for its Talomo hydro-electric plant in the southern Philippines.
     In a statement, PSALM said Hydro Electric submitted the highest bid of 1. 37 mln usd for the 3.5-megawatt plant in Davao, besting two other unidentified bidders.
     The government is to privatize a total of 35 power plants of the National Power Corp (Napocor) beginning this year, as required under a power sector reform law.
     Yesterday, PSALM vice president for assets disposal Froilan Tampinco said at least 48 companies have expressed interest in bidding for the plants.
     He said the government is braving the uncertain political environment in the run-up to the May 10 presidential elections, confident that the bidding will all be successful.
     Earlier estimates place the total proceeds from the asset sale at about 2. 0 bln usd.
     Some 15 power plants with a total capacity of more than 1,400 megawatts are to be sold off in batches between now and June.
     The assets to be sold range from a 600-megawatt bunker fuel plant to a 0. 4MW hydroelectric facility.
     The plants will also be sold free of debt as PSALM will absorb all debts owed to Napocor.
     afxmanila@afxasia.com

Philippines end-2003 external debt 57.4 bln usd vs 56.2 bln end-Sept

     MANILA (AFX-ASIA) - The Philippines' exteral debt rose by 1.2 bln usd to 57.4 bln usd as at end-2003 from 56.2 bln at end-September last year, and by 3.8 bln usd from 53.6 bln at end-2002, the central bank said.
     The central bank attributed the rise to additional loans and some upward revaluation adjustments.
     "The impact on debt service burden, however, is not immediate as repayments of most of these accounts are well spread out into the future," the central bank said in a statement.
     Medium- to long-term loans, with an average maturity of 17.2 years compared with 17.0 years in September, accounted for 89.2 pct of the end-2003 total.
     The central bank said the longer average maturity is a result of concerted efforts by government agencies, including the central bank, to lengthen the maturity of new borrowings.
     The average maturity of public sector accounts was even longer at 19.4 years.
     The central bank's end-2003 gross international reserves of 16.9 bln usd represented 2.7 times the level of short-term accounts, or those with maturity of one year or less based on the original maturity of these loans, and 1.5 times based on residual maturity.
     Loans from official creditors, including international financial institutions and foreign governments, accounted for 45.2 pct of the end-2003 total, followed by foreign holders of bonds and notes with a 29.8 pct share, and then banks and other financial institutions with 18.6 pct.
     The country's external debt remained largely denominated in two tranches, with the US dollar accounting for 53.9 pct and the yen, 27.7 pct. The rest of the external debt was in 16 other foreign currencies, with the Euro accounting for 4.7 pct.
     afxmanila@afxasia.com

Philippine Piltel to return to profitability this yr, says Pangilinan

     (Updating with Smart's plan to avail itself of Piltel tax benefits)
     MANILA (AFX-ASIA) - Pilipino Telephone Corp (Piltel) is on track with its goal to return to profitability starting this year, Philippine Long Distance Telephone Co (PLDT) chairman Manuel Pangilinan said.
     "Piltel is expected to return to profitability this year with prospects for its future looking positive. I think we are on track with our target of hitting about 400 mln pesos in net income this year," said Pangilinan at this morning's Asia Pacific Bankers Congress, where he was a guest speaker.
     PLDT owns 45 pct of Piltel, which dramatically narrowed its net loss last year after posting substantial growth in the revenue of its Talk 'N Text wireless business.
     Piltel has seen sustained losses since 1997, when the Asian crisis that swelled its dollar debt aggravated worsening problems in operations.
     "Barely five years ago, Piltel was given up for dead. Its business was built on the analog platform which was fast losing market share to GSM. In addition, it had a backbreaking debt of over 40 bln pesos and the management of its affairs at the time certainly did not help," Pangilinan said.
     "We faced several options with Piltel, the easiest being to declare bankruptcy and let the 'chips fall where they may'.
     "But we recognized that declaring bankruptcy would have been disastrous for the banking system. Local banks that were also in the midst of the Asian crisis were not in a position to absorb significant losses on their books," Pangilinan told the audience of bankers.
     But now, Piltel has become the third largest cellular phone company in the country, he said.
     It posted a net loss of 3.35 bln pesos for 2003, in line with the company's own projections, compared with a net loss of 21.83 bln in 2002.
     Gross GSM (global system for mobile communications) revenues increased 54 pct year-on-year to 9.03 bln pesos from 5.87 bln, while net GSM revenue rose 78 pct to 3.7 bln pesos from 2.1 bln a year earlier.
     GSM revenues accounted for 83 pct of Piltel's net revenue in 2003.
     As of end-2003, Piltel's GSM brand Talk 'N Text subscribers totalled 2.87 mln, up 62 pct from 1.77 mln at the end of the previous year.
     Piltel earlier submitted its recovery plan to the Philippine Stock Exchange, under which it expects to return to profitability this year, with net profit forecast to come in at 402.4 mln pesos.
     PLDT's highly-profitable wholly-owned wireless unit, Smart Communications Inc, intends to acquire its parent's stake in Piltel and has offered to acquire Piltel's debt.
     The transaction is seen paving the way for a merger between Smart and Piltel, which will facilitate Smart's backdoor-listing.
     Under its franchise, Smart has until August to offer its shares to the public.
     Pangilinan said Smart will benefit from the accumulated tax benefits of Piltel.
     "We estimate that Piltel has about 50 bln pesos in unused tax benefits that Smart could use in the next five to seven years. This year, about 10 bln pesos in Nolco (net operating loss carryover) would expire and which we intend to use," Pangilinan said.
     "Piltel is strategically positioned in the lower end of the cellular market. There are numerous financial benefits to consolidate the accounts of Smart and Piltel as it would enhance the income of Smart," he said.
     Piltel closed today down 0.02 peso at 1.66, after recent gains on persistent Smart merger speculations and easing debt concerns.
     PLDT was down 5.00 at 900 after a 0.38 usd fall of its American Depositary Receipts in New York last night.
     (1 usd = 56.40 pesos)
     afxmanila@afxasia.com

Philippine central bank to delay borrowing to give way to others

     MANILA (AFX-ASIA) - The central bank is inclined to delay its own 500 mln usd borrowing plan so that other Philippine borrowers, including state-owned National Power Corp (Napocor), will be given priority in the international market.
     "We can do it after the fund-raising activities of other Philippine borrowers," central bank governor Rafael Buenaventura told reporters.
     The central bank plans to boost its dollar reserves through a new 500 mln usd borrowing and has formally asked for proposals from private lenders.
     It is looking at three- to five-year loans to enable the national government to raise longer-term funds for its budget-deficit financing.
     The central bank's gross international reserves fell to 15.733 bln usd at end-February from 16.084 bln in January, which the regulator attributed to the debt-service requirements of both the national government and the central bank.
     The central bank is believed to be intervening in the currency market from time to time, unloading some of its dollar reserves to support the weakening peso.
     Weak dollar inflows resulted in a BoP deficit of 822 mln usd in the first two months of the year, wider than the 595 mln deficit recorded in January.
     The Napocor, meanwhile, is set to borrow 200 mln usd in the international market, with the plan already approved by the central bank's Monetary Board.
     It has mandated Barclays to assist it in the fund-raising activity, which is intended to partly finance its funding requirements for this year, totalling 1.5-1.8 bln usd.
     The Napocor is also finalizing the sale of 5.0 bln pesos worth of zero-coupon bonds, and has tapped ING Bank for this issuance.
     (1 usd = 56.40 pesos)
     afxmanila@afxasia.com

Philippines' Piltel to return to profitability this yr, says Pangilinan

     MANILA (AFX-ASIA) - Pilipino Telephone Corp (Piltel) is on track with its goal to return to profitability starting this year, Philippine Long Distance Telephone Co (PLDT) chairman Manuel Pangilinan said.
     "Piltel is expected to return to profitability this year with prospects for its future looking positive. I think we are on track with our target of hitting about 400 mln pesos in net income this year," said Pangilinan at this morning's Asia Pacific Bankers Congress, where he was a guest speaker.
     PLDT owns 45 pct of Piltel, which dramatically narrowed its net loss last year after posting substantial growth in the revenue of its Talk 'N Text wireless business.
     Piltel has seen sustained losses since 1997, when the Asian crisis that swelled its dollar debt aggravated worsening problems in operations.
     "Barely five years ago, Piltel was given up for dead. Its business was built on the analog platform which was fast losing market share to GSM. In addition, it had a back breaking debt of over 40 bln pesos and the management of its affairs at the time certainly did not help," Pangilinan said.
     "We faced several options with Piltel, the easiest being to declare bankruptcy and let the 'chips fall where they may'.
     "But we recognized that declaring bankruptcy would have been disastrous for the banking system. Local banks that were also in the midst of the Asian crisis were not in a position to absorb significant losses on their books," Pangilinan told the audience of bankers.
     But now, Piltel has become the third largest cellular phone company in the country, he said.
     It posted a net loss of 3.35 bln pesos for 2003, in line with the company's own projections, compared with a net loss of 21.83 bln in 2002.
     Gross GSM (global system for mobile communications) revenues increased 54 pct year-on-year to 9.03 bln pesos from 5.87 bln, while net GSM revenue rose 78 pct to 3.7 bln pesos from 2.1 bln a year earlier.
     GSM revenues accounted for 83 pct of Piltel's net revenue in 2003.
     As of end-2003, Piltel's GSM brand Talk 'N Text subscribers totalled 2.87 mln, up 62 pct from 1.77 mln at the end of the previous year.
     Piltel earlier submitted its recovery plan to the Philippine Stock Exchange, under which it expects to return to profitability this year, with net profit forecast to come in at 402.4 mln pesos.
     PLDT's wholly-owned wireless unit, Smart Communications Inc, intends to acquire its parent's stake in Piltel and has offered to acquire Piltel's debt.
     The transaction is seen to pave the way for a merger between Smart and Piltel, which will facilitate Smart's backdoor-listing.
     Under its franchise, Smart has until August to offer its shares to the public.
     Piltel closed today down 0.02 peso at 1.66, after recent gains on persistent Smart merger speculations and easing debt concerns.
     (1 usd = 56.36 pesos)
     afxmanila@afxasia.com

Philippines' PhilWeb chairman acquires company's 22.6 pct from Cabarrus group

     MANILA (AFX-ASIA) - PhilWeb Corp chairman Roberto Ongpin has acquired 14. 37 bln shares, representing 22.6 pct of the company, from the Cabarrus group, the original controlling shareholder of PhilWeb's predecessor company.
     In a disclosure to the stock exchange, PhilWeb said Ongpin's companies, Azurestar Corp and Aquadisk Corp, acquired the PhilWeb shares through a cross transaction on the Philippine Stock Exchange today at 0.011 peso each.
     The acquisition price is the average of the closing prices for the past 30 days.
     The Cabarrus group was the original controlling shareholder of mining firm South Seas Natural Resources Inc, the predecessor company of PhilWeb.
     PhilWeb was top-traded today on volume of 14.42 bln shares, but unchanged at 0.011 peso.
     The company did not disclose Ongpin's total PhilWeb shareholdings after today's transaction.
     PhilWeb, a leading integrated internet firm in the Philippines, recently won a contract to operate the internet sports betting and internet casinos of state-run Philippine Amusement Gaming Corp.
     (1 usd = 56.40 pesos)
     afxmanila@afxasia.com

Philippines' San Miguel to pay cash div of 0.35 peso/share

     MANILA (AFX-ASIA) - Food and beverage conglomerate San Miguel Corp said it will pay a cash dividend of 0.35 peso per share to all stockholders on record as of April 16.
     Payment is set for May 10.
     (1 usd = 56.40 pesos)
     afxmanila@afxasia.com

Manila shares close mixed on bargain-hunting after 3 days of losses

     MANILA (AFX-ASIA) - Share prices closed mixed after three days of losses, as bargain-hunters bought into blue chips, such as Globe Telecom and other Ayala stocks, dealers said.
     Further losses in Philippine Long Distance Telephone Co (PLDT), however, capped the market's upside, they added.
     In the broader market, losers led gainers 32 to 17, while 35 stocks were unchanged.
     Dealers said investors may just be taking short-term positions at this point.
     The composite index closed up 3.25 points, or 0.23 pct, at 1,393.12 on volume of 14.66 bln shares worth 676 mln pesos. It traded between 1,390.14 and 1,402.08.
     Cross sales in information technology firm Philweb Corp, involving 14.4 bln of its shares valued at 158.06 mln pesos, boosted the market's turnover.
     "The market has been moving sideways in the past few weeks, given the short-term positions investors have been taken," Citiseconline.com analyst Mark Alan Canizares said.
     "And, since we were down for the past three days, bargain-hunting opportunities have emerged, although the sustainability of these gains is uncertain."
     Political concerns are heightening ahead of the elections on May 10, with thousands of candidates for more than 17,000 local government positions officially launching their campaigns today.
     Dealers said lingering global security concerns amid fears of terrorist attacks will also continue to weigh on sentiment.
     "Investors locked in some of their gains in late trade. They are now more cautious, given the growing political uncertainties," Accord Capital Equities research consultant Ron Rodrigo said.
     "We may see another lackluster session tomorrow, although more selective bargain-hunting is possible."
     Globe Telecom was up 20 pesos at 795 on 141,790 shares.
     PLDT dropped 5.00 to 900 on 90,180 shares.
     Ayala Corp was up 0.10 at 6.10 and property unit Ayala Land up 0.10 at 5. 10.
     Ayala Land Inc, which held its annual stockholders' meeting yesterday, expects net profit in the first quarter to come in higher than the 510 mln pesos posted in the same period in 2003, as sales grew in the first two months of the year.
     Jollibee Foods Corp rose 0.25 to 16.50.
     Manila Electric B, available to foreign investors, fell 0.50 to 26, while Meralco A dropped 0.25 to 17.
     PLDT affiliate Pilipino Telephone Corp was down 0.02 at 1.66.
     Bank of the Philippine Islands was unchanged at 43 even after president Xavier Loinaz said, after today's annual stockholders' meeting, that the bank's net profit in the first quarter to March will exceed the year-earlier level of 1.36 bln pesos.
     The all-shares index was down 3.95 points at 897.04.
     The commercial-industrial index rose 3.15 to 2,177.47.
     Property climbed 4.92 to 494.27, but mining dropped 0.71 to 1,405.63.
     Oil shed 0.05 to 1.12.
     Banking and financial services advanced 0.56 to 416.91.
     (1 usd = 56.40 pesos)
     afxmanila@afxasia.com

Manila shares firmer in late trade on bargain-hunting; PLDT capping upside

     MANILA (AFX-ASIA) - Share prices rebounded in thin trade late morning as bargain-hunters re-entered the market to buy into blue chips such as Globe Telecom and other Ayala stocks, dealers said.
     Further losses in Philippine Long Distance Telephone Co (PLDT), however, capped the market's upside.
     Dealers said investors may just be taking short-term positions at this point.
     At 11.22 am, the composite index was up 6.36 points or 0.46 pct at 1,396. 23 on volume of 109.1 mln shares valued 277.1 mln pesos. It has so far traded between 1,390.14 and 1,402.08.
     In the broader market, gainers led losers 26 to 18, with 25 stocks unchanged.
     Political concerns are growing ahead of the May 10 elections, with thousands of candidates for more than 17,000 local government positions officially launching their campaigns today.
     Dealers said lingering global security concerns amid fears of terrorist attacks will also continue to weigh on sentiment.
     "The market has been moving sideways for the past few weeks given the short-term positions being taken by investors. And since we were down for the past three days, bargain-hunting opportunities have emerged, although the sustainability of these gains remains to be seen," Citiseconline.com analyst Mark Alan Canizares said.
     Top-traded Globe Telecom was up 15 pesos at 790 on 130,330 shares.
     PLDT was down 10 at 895 on 57,740 shares.
     (1 usd = 56.40 pesos)
     afxmanila@afxasia.com

DATAWATCH - Philippine manufacturing output seen to pick up in H2 - GK Goh

     MANILA (AFX-ASIA) - Philippine manufacturers are likely to be encouraged to produce more goods, particularly in the second half of the year, or after election uncertainties ease, said Song Seng Wun, a regional economist at Singapore-based GK Goh Securities.
     He noted that the 0.2 pct year-on-year drop in January in the manufacturing output of the Philippines in volume terms was the smallest dip in six months, indicating a pick-up in production probably in major sectors, such as food and electronics.
     The National Statistics Office (NSO), however, said today that the January output in value terms rose 4.4 pct year-on-year.
     The December output in volume terms dropped 3.0 pct year-on-year.
     Sales in January rose 2.7 pct year-on-year in volume and were up 10.1 pct year-on-year in value.
     "The 0.2 pct drop in January's output in volume terms was the smallest decline seen in six months and I guess there were pick-ups in food processing and electronics, which offset the weak performances in other sectors," Song said.
     The NSO said the year-on-year drop in January's manufacturing output in volume terms was due to the slowdown in production of leather goods, tobacco, footwear and wearing apparel, petroleum products, transport equipment, wood and wood products.
     "The manufacturing sector's performance will remain volatile, but, despite the political uncertainty, factories in the Philippines may boost production as regional and global demands pick up," Song said.
     "I guess we will see positive figures, particularly in the second half, also because of the low bases (of comparison) for that period."
     Filipinos will go to the polls on May 10 to elect a president, a vice president, members of Congress and about 17,000 local government officials.
     afxmanila@afxasia.com

Bank of the Philippine Islands sees Q1 net profit exceeding year-earlier level

     MANILA (AFX-ASIA) - Bank of the Philippine Islands (BPI) expects net profit in the first quarter to March to exceed the year-earlier level of 1.36 bln pesos.
     "I think we are going to do better than last year," BPI president Xavier Loinaz told reporters after today's annual stockholders' meeting, when asked about how the bank is expected to perform in the first quarter.
     He did not elaborate.
     Loinaz added that BPI, the banking arm of Ayala Corp, intends to sell 2.0 bln pesos worth of property to raise revenue.
     (1 usd = 56.38 pesos)
     afxmanila@afxasia.com

Philippines Jan manufacturing output down 0.2 pct yr-on-yr by volume

     MANILA (AFX-ASIA) - Philippine manufacturing output in January fell 0.2 pct year-on-year by volume, but was up 4.4 pct year-on-year by value, the National Statistics Office (NSO) said.
     The NSO said manufacturing sales were up 2.7 pct year-on-year by volume and up 10.1 pct year-on-year by value.
     The agency has revised the December manufacturing data.
     It said output by volume fell 3.0 pct year-on-year in December from the earlier reported drop of 3.1 pct, while sales fell 0.2 pct year-on-year from the earlier reported drop of 0.3 pct.
     The December output by value rose 3.6 pct year-on-year from the earlier reported rise of 3.4 pct, while the year-on-year growth in sales by value was unchanged at 7.3 pct.
     The average capacity utilization rate of the manufacturing sector in January stood at 78.0 pct compared with 78.4 pct in December, which was revised from 78.2 pct.
     The NSO said the year-on-year drop in January manufacturing output by volume was due to the slowdown in production of leather products, tobacco, footwear and wearing apparel, petroleum products, transport equipment, wood and wood products.
     Month-on-month, manufacturing output in volume terms slumped by 0.3 pct in January due to double-digit declines in fabricated metals, tobacco, footwear and wearing apparel, beverage and chemical products.
     In value terms, the manufacturing industry grew 4.4 pct year-on-year in January due to a production boost mainly in non-electrical machinery, basic metals, publishing and printing, miscellaneous manufactures, and beverages.
     On a monthly basis, the NSO said the January output by value fell 1.1 pct due to double-digit declines in fabricated metal products, beverages and chemical products.
     afxmanila@afxasia.com

Philippines' Piltel on track to return to profitability this year - Pangilinan

     MANILA (AFX-ASIA) - Pilipino Telephone Corp (Piltel) is on track with its goal to return to profitability starting this year, Philippine Long Distance Telephone Co (PLDT) chairman Manuel Pangilinan said.
     PLDT owns 45 pct of Piltel, which had dramatically narrowed its net loss last year after posting substantial growth in the revenue of its Talk 'N Text wireless business.
     Piltel posted a net loss of 3.35 bln pesos for 2003, in line with the company's own projections, compared with a net loss of 21.83 bln in 2002.
     Gross GSM (global system for mobile communications) revenues increased 54 pct year-on-year to 9.03 bln pesos from 5.87 bln, while net GSM revenue rose 78 pct to 3.7 bln pesos from 2.1 bln a year earlier.
     GSM revenues accounted for 83 pct of Piltel's net revenue in 2003.
     As of end-2003, Piltel's GSM brand Talk 'N Text subscribers totalled 2.87 mln, up 62 pct from 1.77 mln at the end of the previous year.
     Piltel earlier submitted its recovery plan to the Philippine Stock Exchange, under which it expects to return to profitability this year, with net profit forecast to come in at 402.4 mln pesos.
     PLDT's wholly-owned wireless unit, Smart Communications Inc, intends to acquire its parent's stake in Piltel and has offered to acquire Piltel's debt.
     The transaction is seen to pave the way for a merger between Smart and Piltel, which will facilitate Smart's backdoor-listing.
     Under its franchise, Smart has until August to offer its shares to the public.
     (1 usd = 56.36 pesos)
     afxmanila@afxasia.com

Philippines Ayala Land hikes short-term CPs to 2.0 bln pesos

     MANILA (AFX-ASIA) - Ayala Land Inc said it has filed with the Securities and Exchange Commission (SEC) a registration statement to renew its 1.0 bln pesos short-term commercial papers (STCPs) and increase their amount to 2.0 bln.
     The property arm of Ayala Corp intends to use proceeds from the STCPs for loan refinancing, operating expenses and purchase of inventories.
     The one-year STCPs will be issued in tranches over the validity period to be approved by the SEC, Ayala Land senior vice president and chief financial officer Jaime Ysmael said in a letter to the stock exchange.
     The STCPs will be priced at 100 pct of face value or at par, with the issue consisting of fixed-rate and/or floating rate tranches, with the interest rate to be based on prevailing market rates.
     Ysmael said the STCP issue has been assigned a rating of PRS 1 by the Philippine Rating Services Corp (PhilRatings), which "denotes strongest capability for timely payment...on both interest and principal."
     (1 usd = 56.37 pesos)
     afxmanila@afxasia.com

Philippines' Sy group seeking board seat in Equitable PCI - report

     MANILA (AFX-ASIA) - The group of mall magnate Henry Sy is seeking an alliance with minority shareholders of Equitable PCI Bank to be able to secure a board seat in Equitable PCI Bank, the Philippine Daily Inquirer reported, citing unnamed banking sources.
     The Sy group was reportedly soliciting proxies to be able to get a board representation in Equitable PCI, which is controlled by the Go family.
     Equitable PCI will hold its annual stockholders' meeting on April 20.
     The report said the acquisition by the Sy group of a board seat in Equitable PCI will bolster its bid to acquire a 29 pct block in the country's third biggest bank.
     The report quoted a source from the Sy family as saying: "Equitable PCI is being run by a group which doesn't even own the single biggest stake. We want to make sure that the voice of the minority shareholders will be heard."
     The Sy family currently controls Banco de Oro Universal Bank (BDO), also one of the country's biggest banks.
     Banco de Oro has entered into an agreement to buy the 29 pct stake of state-run pension fund Social Security System (SSS) in Equitable PCI.
     Banco de Oro, however, earlier said SSS was considering seeking an "all-cash" payment for its Equitable PCI shares.
     Under their original agreement, BDO was to pay SSS 43.50 pesos for each Equitable PCI share, or a 30 pct premium over the stock's end-2003 closing price.
     BDO was also 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 shares in Equitable PCI, which closed yesterday at 38.50 pesos.
     (1 usd = 56.36 pesos)
     afxmanila@afxasia.com

Philippines' Nenaco says talks with prospective investors delayed

     MANILA (AFX-ASIA) - Negros Navigation Co (Nenaco) said its negotiations with prospective investors have been delayed due to uncertainties arising from its dispute with its former ship repair and drydock provider, Japanese firm Tsuneishi Heavy Industries Inc.
     Earlier, Nenaco said it was in debt repayment talks with Tsuneishi, which had initiated legal action against the Metro Pacific Corp's shipping unit.
     Nenaco said the courts in metropolitan Cebu ordered it and Tsuneishi to amicably work together to achieve a comprehensive repayment plan.
     A local newspaper had reported that the Japanese firm filed garnishment proceedings against Nenaco, asking a Cebu court to freeze the shipping firm's account in Prudential Bank for failing to pay debts of 100 mln pesos.
     The report said Tsuneishi is a joint partner of Nenaco's rival Aboitiz Transport Services Inc.
     In a statement, Nenaco president and general manager Conrado Carballo said the dispute has "caused a significant delay in the delicate talks we had with third parties who would have infused 600 mln pesos or more into Nenaco."
     afxmanila@afxasia.com

Philippines' Aboitiz Equity profit falls to 2.025 bln pesos in 2003

     MANILA (AFX-ASIA) - Conglomerate Aboitiz Equity Ventures Inc (AEV) said it posted an unaudited net profit of 2.025 bln pesos after preferred dividend payments in 2003, down from the year-earlier 2.205 bln.
     The company, however, noted that its 2002 net profit included proceeds from unit Luzon Hydro Corp's business interruption claim of 236 mln pesos.
     On a recurring basis, therefore, AEV said its 2003 net profit was up 3.0 pct from the previous year's recurring net profit level, giving the company a compounded annual growth rate of 22 pct last year.
     AEV's business interests cover shipping and transport, power generation, engineering and construction, industrial gas production, food, banking and financial services, and real estate development.
     AEV said its power subsidiaries and associates posted the largest contribution to last year's earnings, with a combined contribution of 1.36 bln pesos. This, however, was lower compared with the year-earlier recurring level of 1.44 bln pesos.
     Its banking units, Union Bank of the Philippines and City Savings Bank, turned in combined earnings of 749 mln pesos, up 46 pct over the previous year.
     Contributions from the transport group totalled 256 mln pesos, up 17 pct from 2002, while Philmico Foods Corp contributed 173 mln pesos, down 28 pct.
     Other AEV investments contributed 12 mln pesos.
     AEV said its cash balance rose to 3.3 bln pesos as at end-2003 from 2.3 bln at end-2002.
     (1 usd = 56.37 pesos)
     afxmanila@afxasia.com

Philippines' power plants attract 48 prospective bidders - PSALM official

     MANILA (AFX-ASIA) - At least 48 companies have expressed interest in bidding for state-owned power plants that are to be privatized beginning this year, said an official of the agency assigned to dispose of the assets.
     "As of March 20, a total of 48 companies have expressed interest (to join the bidding)," said Froilan Tampinco, vice president for assets disposal of the Power Sector Assets and Liabilities Management Corp (PSALM).
     PSALM will sell a total of 35 power plants owned by state-owned National Power Corp (Napocor) under a power sector reform law. About 15 of these assets will be sold off by June.
     The first asset to be put on the auction block, scheduled tomorrow, is the Talomo power plant, he said.
     Tampinco said that despite the uncertain political environment due to the holding of presidential elections on May 10, PSALM is committed to undertake the asset privatization beginning this year.
     Earlier estimates place the total proceeds from the asset sale at about 2. 0 bln usd.
     The power plants to be sold off in several batches between now and June have a total capacity of more than 1,400 megawatts.
     The assets to be sold range from a 600-megawatt bunker fuel plant to a 0. 4MW hydroelectric facility.
     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

Austrlia/NZealand economic and corporate news summary DNH33

     BEIJING (AFX-ASIA) - A summary of Australia and New Zealand economic and corporate news at 0500 GMT
     -Australia warns terrorists could exploit security flaws in Pacific states
     -National Australia Bank releases APRA report
     -NAB - to take capital adequacy ratio to 10 pct
     -NAB - APRA report consistent with PwC report into forex scandal
     -National Australia Bank to remain under close regulatory supervision - APRA
     -National Australia Bank to terminate shr buyback to meet APRA recommendations
     -Nufarm H1 net loss 1.9 mln aud vs loss 4.0 mln
     -Air New Zealand to increase flights to Australia from July
     emily.xiong@xfn.com

Manila shares close sharply lower on political, security concerns

     MANILA (AFX-ASIA) - Share prices closed sharply lower, driving the main index down to its weakest level in more than three months, on follow-through selling amid growing pre-election political and security concerns, dealers said.
     They said domestic and external concerns, including US market weakness, weighed on some blue chips, in particular Philippine Long Distance Telephone Co (PLDT) and rival Globe Telecom.
     The bearish sentiment is expected to prevail in the run-up to the May 10 Philippine presidential elections, they added.
     The composite index closed down 28.86 points or 2.03 pct at 1,389.87, on volume of 188.4 mln shares valued at 878.3 mln pesos, of which 567.4 mln was from cross sales. It traded between 1,389.87 and 1,418.51.
     It was the index's weakest finish since Dec 12, when it closed at 1,383. 32.
     In the broader market, losers led gainers 42 to 11, while 34 stocks were unchanged.
     "The market's failure to hold support at 1,420 yesterday has seen the downward momentum continue," Westlink Global Equities chairman Rommel Macapagal said.
     He said the market shrugged off the government's encouraging fiscal performance in the first two months of this year, and the peso's mild recovery against the US dollar.
     "Investors may look at these positive developments once the market has found its support," Macapagal said.
     The peso averaged 56.367 to the US dollar at noon, after closing yesterday at the day's high of 56.37. It fell to a record low of 56.45 on Monday.
     Currency traders said the peso regained lost ground as demand for the dollar eased amid perceived central bank support for the local unit at 56.40 levels and as the government appeared to be on track with its fiscal program.
     The government's budget deficit widened to 34.6 bln pesos as at end-February from 16.1 bln at end-January. In February alone, government revenues were 18.4 bln pesos lower than expenditure.
     "We're now looking at 1,380 as the next support level. Domestic and external concerns combined to drag the market lower," DA Market Securities president Nestor Aguila said.
     "This is the pre-election scenario we were looking at, and unfortunately, the weak US market, possible terror attacks (after the killing of a leader of the militant group Hamas), and political developments in Taiwan added to the bearish sentiment."
     Taiwan has been plunged into a political crisis after President Chen Shui-bian's narrow re-election on Saturday.
     In the Philippines, incumbent Gloria Arroyo is running neck-and-neck in the presidential race with popular movie star and high-school dropout, Fernando Poe Jr.
     Top-traded PLDT was down 10 pesos at 905 on volume of 590,190 shares worth 536.5 mln pesos, of which 478.9 mln represented cross sales.
     Globe Telecom was down 45 pesos at 775 on 92,130 shares.
     PLDT affiliate Pilipino Telephone (Piltel) succumbed to profit-taking, falling 0.10 to 1.68 on 18.8 mln shares. It had made gains on the looming entry of PLDT's highly profitable wireless unit, Smart Communications Inc, into Piltel.
     Ayala Corp was down 0.10 at 6.00, while property unit Ayala Land was down 0.20 at 5.00, with investors shrugging off the latter's bullish earnings forecast for the first quarter.
     Ayala Land president Francisco Licuanan told reporters after today's annual shareholders' meeting that the company expects net profit in the first quarter to come in higher than the 510 mln pesos posted in the same period in 2003, based on a pick-up in sales in the first two months of the year.
     Oil refiner Petron Corp fell 0.10 to 2.65 on concerns that its sales may weaken, amid rising world crude prices and the shutdown on Monday of its refinery in Bataan.
     Meralco B, available to foreign investors, was down 1.00 at 26.50, after breaking through its support level, while Meralco A dropped 1.00 to 17.25.
     Meralco parent First Philippine Holdings retreated 1.00 to 20.
     ABS-CBN Holdings was down 2.75 at 19.25
     The all-shares index fell 5.08 points to 900.99.
     The commercial-industrial index shed 47.25 to 2,174.32.
     Property lost 8.72 to 489.35, while mining dropped 17.66 to 1,406.34.
     Oil was unchanged at 1.17.
     Banking and financial services shed 5.42 to 417.47.
     afxmanila@afxasia.com

Manila shares sharply down late trade on domestic/external concerns

     MANILA (AFX-ASIA) - Share prices were sharply lower in late trade on follow-through selling, which drove the main index below the key 1,400-point support level, dealers said. There was further selling in blue chips, mainly in Philippine Long Distance Telephone Co (PLDT) and rival Globe Telecom, on bearish overall sentiment as the May 10 Philippine presidential elections draw near, they added.
     Wall Street's sustained weakness also provided a negative backdrop, they said.
     At 11.22 am, the composite index was down 27.32 points, or 1.93 pct, at 1, 391.41 on volume of 136.7 mln shares valued at 699.7 mln pesos, of which 504. 9 mln accounted for cross sales.
     In the broader market, losers led gainers 34 to six, with 31 stocks unchanged.
     "The market's failure to hold support at 1,420 yesterday has seen the downward momentum continue," Westlink Global Equities chairman Rommel Macapagal said.
     He said the market is, for the moment, shrugging off the government's encouraging fiscal performance in the first two months of this year, and the peso's mild recovery against the US dollar.
     The market's next support level is 1,380 points, dealers said.
     The peso averaged 56.366 to the US dollar in late morning trade, having closed yesterday at the day's high of 56.37. It fell to a record 56.45 on Monday.
     Currency traders said the peso regained some lost ground as demand for the dollar eased amid perceived central bank support for the local unit at 56. 40 levels and as the government appeared to be on track with its fiscal program.
     The government's budget deficit widened to 34.6 bln pesos as at end-February from 16.1 bln at end-January. In February alone, government revenues were 18.4 bln pesos lower than expenditures.
     Top-traded PLDT was down 10 pesos at 905 on volume of 526,680 shares worth 479.1 mln pesos, of which 458.4 mln represented cross sales.
     Globe Telecom was down 50 pesos at 770 on 51,180 shares.
     PLDT affiliate Pilipino Telephone (Piltel) succumbed to profit-taking, falling 0.06 to 1.72 on 15.6 mln shares. It had made gains on the looming entry of PLDT's highly profitably wireless unit, Smart Communications Inc, into Piltel.
     Ayala Corp was down 0.10 at 6.00, while property unit Ayala Land was down 0.10 to 5.10, with investors shrugging off the latter's bullish earnings forecast for the first quarter.
     Ayala Land president Francisco Licuanan told reporters after today's annual stockholders' meeting that the company expects net profit in the first quarter to come in higher than the 510 mln pesos posted in the same period in 2003, as sales grew in the first two months of the year.
     Oil refiner Petron Corp fell 0.05 to 2.70 on concerns that its sales may be adversely affected by rising world crude prices and the shutdown on Monday of its refinery in Bataan.
     Meralco B, available to foreign investors, was down 1.00 at 26.50, after breaking a support level, while Meralco A dropped 1.00 at 17.25.
     Meralco parent First Philippine Holdings retreated 0.75 to 20.25.
     ABS-CBN Holdings was down 2.75 at 19.25
     The all-shares index fell 4.77 points to 901.30.
     The commercial-industrial index shed 47.74 to 2,173.83.
     Property lost 4.25 to 493.82, while mining dropped 17.66 to 1,406.34.
     Oil was unchanged at 1.17.
     Banking and financial services shed 5.25 to 417.64.
     afxmanila@afxasia.com

STOCK ALERT - Philippines' Globe Telecom down on weak market sentiment

     MANILA (AFX-ASIA) - Globe Telecom was sharply lower in mid-trade amid continued selling after the market broke support levels yesterday and today, dealers said.
     Globe was down 55 pesos or 6.71 pct at 765 on 41,590 shares.
     The composite index failed to hold support at the 1,420-point level yesterday and 1,400 today.
     At 10.49 am, the index was down 26.18 points or 1.85 pct at 1,392.55.
     (1 usd = 56.37 pesos)
     afxmanila@afxasia.com

Philippines Ayala Land expects Q1 net profit to exceed yr-earlier 510 mln peso

     MANILA (AFX-ASIA) - Ayala Land Inc said it expects net profit in the first quarter to come in higher than the 510 mln pesos it posted in the same period in 2003, as sales grew in the first two months of the year.
     The property arm of Ayala Corp has set a budget of 5.6 bln pesos for capital expenditures this year, compared with last year's budget of 5.2 bln.
     Ayala Land president Francisco Licuanan III told reporters after today's annual stockholders' meeting that the company will fully finance this year's capex budget using internally-generated funds.
     (1 usd = 56.37 pesos)
     afxmanila@afxasia.com

STOCK ALERT -Philippines' Petron weaker on rising crude prices, plant shutdown

     MANILA (AFX-ASIA) - Petron Corp was weaker in early trade on concerns that its sales may be adversely affected by rising world crude prices and the shutdown on Monday of its refinery in Bataan, dealers said.
     Petron was down 0.05 peso at 2.70 on 1.9 mln shares traded.
     The company on Monday raised the pump prices of its gasoline products by 0.60 peso per liter and kerosene by 0.40 per liter, matching the price hikes announced by its rivals on Saturday.
     The oil firms said they need to recover additional costs arising from higher crude prices in the world markets and the peso's weakness against the US dollar.
     Yesterday, Petron disclosed it shut down its Bataan refinery on Monday due to a power failure in the area, but assured that supply would remain normal.
     The Bataan refinery has a capacity of 180,000 barrels per day.
     (1 usd = 56.37 pesos)
     afxmanila@afxasia.com

STOCKWATCH - Philippines' Piltel down on profit-taking, weak market sentiment

     MANILA (AFX-ASIA) - Pilipino Telephone Corp (Piltel) was weaker in early trade as investors have begun to lock in gains amid the market's overall bearish sentiment, dealers said.
     The market's failure to hold support at 1,420-point level yesterday triggered further selling in early trade and a test of support at 1,400 level, they said.
     At 10.19 am, Piltel was down 0.04 at 1.74 on 4.7 mln shares traded.
     The composite index was down 14.96 points or 1.12 pct at 1,402.77.
     "Its probably a 'sell on news' or could be profit-taking due to the overall negative market sentiment," Westlink Global Equities chairman Rommel Macapagal said.
     Piltel posted further gains after affiliate Smart Communications Inc disclosed on Monday that it is seeking creditors' and guarantors' consent to acquire the 45.3 pct interest of parent Philippine Long Distance Telephone Co (PLDT) in Piltel.
     Smart will initially allow Piltel creditors to exchange their loan exposure to Piltel either for cash - in US dollars or pesos - or for Smart's US dollar-denominated loan obligations or US dollar-denominated sovereign bonds.
     While PLDT said it is not Smart's intention to merge with Piltel, nor does it intend to use Piltel as a backdoor-listing vehicle, dealers said the entry of highly profitable Smart into Piltel will likely lead to a merger between the two wireless firms.
     Under its franchise, Smart has until August this year to offer some of its shares to the public.
     (1 usd = 56.37 pesos)
     afxmanila@afxasia.com

Philippines' PLDT 469,830 shares cross sold for 910 pesos/shr early on PSE

     MANILA (AFX-ASIA) - Some 469,830 common shares of Philippine Long Distance Telephone Co (PLDT) were sold in two cross transactions in early trade for 910 pesos each, data from the Philippine Stock Exchange showed.
     The transactions, which were undertaken by UBS, amounted to 427.5 mln pesos.
     At 9.42 am, PLDT was down 5.00 pesos at 910 on 470,060 shares, accounting for 95.3 pct of the market's total turnover so far.
     No other details were immediately available.
     (1 usd = 56.37 pesos)
     afxmanila@afxasia.com

Moody's, S&P maintain PLDT ratings, despite Smart offer to Piltel creditors

     MANILA (AFX-ASIA) - Moody's Investors Service and Standard & Poor's Ratings Services said Smart Communications Inc's offer to buy the debts of Pilipino Telephone Corp (Piltel) will not have an impact on the ratings of Philippine Long Distance Telephone Co (PLDT).
     Moody's today affirmed its Ba2 senior unsecured debt rating, with a negative outlook, and its B1 preferred stock rating, with a stable outlook, for PLDT, which wholly owns Smart.
     S&P said it is maintaining its BB rating on PLDT with a stable outlook.
     Smart intends to acquire PLDT's 45.3 pct stake in Piltel and has offered cash or a loan swap with the latter's creditors.
     Piltel creditors have the option to exchange their loans with either bonds issued by Smart or sovereign bonds.
     It is expected that, after the successful completion of the debt exchange transaction, PLDT's ordinary and preferred stockholding in Piltel will be transferred to Smart.
     Smart is then seen acquiring majority ownership of Piltel.
     In a statement, Moody's said the negative outlook for PLDT's Ba2 senior unsecured debt rating reflects the negative outlook for the Philippines' Ba2 foreign currency sovereign rating.
     The PLDT group now holds 45 pct of Piltel's common equity and 59 mln preferred shares convertible to Piltel shares. Assuming the conversion of all these convertible preferred shares into common equity, PLDT's equity interest in Piltel will increase to about 92 pct, S&P said.
     "The increase in PLDT group's consolidated debt, following the purchase of Piltel's debt will not have a significant impact on its financial profile, " S&P said in a separate statement.
     Moody's said the transaction will increase PLDT's consolidated leverage as debt at Smart will rise and interest coverage will be adversely affected.
     However, it said the impact on the credit metrics of PLDT is acceptable within the current rating.
     "The range of increase in leverage will vary as there are a number of ways in which Piltel creditors can exchange their debts at various discounts to face value," it said.
     Moody's, however, said that, if the Smart offer terms are substantially amended such that the cost of the transaction to Smart will increase, it will revisit the impact on PLDT's rating.
     Moody's and S&P said PLDT's wireless business should benefit from the closer operational alignment of Smart and Piltel.
     Further increases in debt at Smart level or an initial public offering of Smart will, however, have the potential to impact negatively the rating, Moody's said.
     afxmanila@afxasia.com

Philippines' Arroyo blames political opposition for weakening peso

     MANILA (AFX-ASIA) - President Gloria Arroyo today blamed the opposition for causing the peso to weaken through its politicking and fielding an unqualified candidate to run against her in the May 10 elections.
     Her comments came as the peso recovered to trade at a high of 56.37 to the US dollar late today after hitting a record low of 56.450 yesterday.
     "The (fall) ... in the peso signals an underlying fear that the opposition, by its politicking, is dragging us (in)to the past and crushing our hopes for the future," Arroyo said in a statement.
     In a campaign sortie later in the day, Arroyo said the peso has weakened because "financial markets are really nervous that the one who may take over may be someone who has no knowledge about attracting the right investments to our country."
     This was an apparent reference to opposition candidate, movie-star Fernando Poe Junior, a high-school drop-out with no experience in government.
     Arroyo also challenged the opposition to "explain their options and solutions to the people," again taking a jab at Poe, who has avoided public debates on government policy.
     Surveys show Poe and Arroyo running neck and neck in the race.
     Poe's camp has blamed Arroyo for the peso's fall, saying she failed to control the budget deficit and was forced to seek more foreign loans.
     "We are not denying the economic problems we are facing, but I believe I have the clout and experience to tackle those problems and protect the public interest," Arroyo retorted.
     Dealers said the peso recovered today after the release of figures showing that the budget deficit in February amounted to 34.6 bln pesos, a 9.4 pct rise from the same month last year.
     Analysts said the February deficit was within their projections and this had helped strengthen the local currency.

Philippine central bank to borrow 500 mln usd to boost reserves

     MANILA (AFX-ASIA) - The central bank said it intends to boost its dollar reserves before the May 10 presidential election through a new 500 mln usd borrowing.
     "We think there might be an opportunity. We would like to see if we have a good market today or we'll wait until end of the year. We asked for proposals (from private lenders). We're looking at about 500 million usd," Buenaventura told reporters.
     The central bank is limiting itself to the three- to five-year loan market to give way to the national government in raising longer-term funds for its budget-deficit financing.
     Market sources said at least four investment banks have expressed interest in the central bank's newest fund-raising activity. These are HSBC, Citigroup, JP Morgan Chase and Deutsche Bank.
     Buenaventura said proceeds of the planned borrowing will be purely for "balance of payments (BoP) management."
     A banker said now is the best time for the central bank to borrow
     "It would be more expensive to raise new money later in the year because of the apprehension of foreign investors on the policy-direction of whoever wins the presidential polls," he said.
     "There is a window of opportunity now. It is best for the central bank to get it over and done with rather than wait after election," the banker said, adding that after the election investors may continue to hold off from increasing their exposure in the country, until after the policy direction of the new political leader is known.
     The central bank's gross international reserves (GIR) fell to 15.733 bln usd as at end-February from 16.084 bln in January, which the regulator attributed to the debt-service requirements of both the national government and the central bank.
     The central bank is believed to be intervening in the currency market from time to time, unloading some of its dollar reserves in support of the weakening peso.
     Weak dollar inflows resulted in a BoP deficit of 822 mln usd in the first two months of the year, wider than the 595 mln deficit recorded in January.
     The end-February GIR was adequate to cover 4.4 months of imports of goods and payments of services and income. It was also equivalent to 2.7 times the country's short-term debt, based on original maturity, and 1.4 times, based on residual maturity, the central bank said.
     The central bank said it intends to maintain the GIR at a comfortable level of 14-15 bln usd this year.
     afxmanila@afxasia.com