Philippines Microeconomic Weekly Update #40

MACROECONOMICS WEEKLY UPDATE

President Ferdinand “Bongbong” Marcos Jr. has approved the creation of the Maharlika Investment Fund, the Philippines’ inaugural sovereign wealth fund, despite widespread public dissatisfaction with the move. The fund’s future is uncertain as it may face financial challenges depending on the Bangko Sentral ng Pilipinas’ performance by the end of 2023, following the BSP’s net loss of P1.4 bn in the first quarter.

For positive news for the economy, as personal remittances from overseas Filipino workers (OFWs) rose by 2.9 percent to $2.78 bn in May, driven by the increasing adoption of digital transfer platforms. Moreover, the national government successfully raised P30 bn from the full award of seven-year Treasury bonds, with a higher average yield than the previous issuance in March. The Governor of Bangko Sentral ng Pilipinas indicated a preference for maintaining a pause in rate adjustments to assess the impact of previous aggressive tightening on the Philippine economy.

INDUSTRY UPDATE

ENERGY

Vince Perez’s renewable energy company, Alternergy, emerged victorious in all three projects it bid on during the Green Energy Auction 2 (GEA 2) event by the Department of Energy (DoE) on July 3. These projects have a total capacity of 200 megawatts, boosting ALTER’s installed capacity from 84 MW to 384 MW within three years. Meanwhile, Citicore Renewable Energy Corp (CREC) secured an impressive 916 MW of renewable energy projects in the latest DoE auction, positioning them to achieve an operational capacity of approximately 1,000 MW in the next five years. Additionally, CREC is making headlines for its rumored plans of a massive IPO, aiming to raise funds for a $4 billion renewables spending initiative.

INFRASTRUCTURE

San Miguel (SMC) and Metro Pacific (MPI) have confirmed their collaboration to connect Cavite and Batangas provinces by merging their respective road projects. The planned 96-kilometer tollway road is set to commence construction in 2024 and be completed by 2028. The agreement was initially discussed by Ramon Ang and Manny V. Pangilinan in June, and while SMC and MPI are currently finalizing the specifics, definitive agreements are yet to be signed.

TELECOMMUNICATION

Globe (GLO) has successfully sold 114 towers to Unity Digital Infrastructure for ₱1.4 bn in cash, marking the initial phase of a larger sale-leaseback transaction involving a total of 447 towers. As for the total transaction value of the deal, it is valued at P5.4 bn.

PROPERTY AND CONSTRUCTION 

Ayala Corp (AC) has expressed its intention to explore the sale of additional preferred shares in 2023 as part of its “liability management” strategy. CFO Alberto De Larrazabal stated that they aim to carefully time the market using a strategic and phased approach. The objective is to generate funds to refinance the maturing debts of Ayala Corp. If we look back at the first round of prefs that AC sold back in May it was well-received by the market, with the firm offer and the oversubscription allotment fully selling out and raising around ₱13 billion for the conglomerate.

REAL ESTATE INVESTMENT TRUST\

Cosco Capital clarified that it is currently studying a Real Estate Investment Trust (REIT) but stated that it is unlikely to be finalized this year. This clarification came after PSE President Ramon Monzon mentioned that Cosco was expected to file their application for a REIT IPO in the coming months, potentially raising between ₱15 billion and ₱30 billion.

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