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Trade Undersecretary Cristino Panlilio Photo from dti.gov.ph

Waiting game

Most people are betting that Standard & Poor’s will be the first major global credit rating agency that will give the Philippine government its first taste of an investment grade, given the recent change in the agency’s outlook to “positive” from “stable.”

But don’t be surprised if Fitch Ratings beats S&P in emancipating our sovereign rating from “junk” bond status (sans any change in outlook, that is).

Emilio Neri Jr., chief economist at BPI’s financial markets group, said in a recent research note that it was possible for Fitch to beat S&P into crowning the Philippines with an investment grade by the second half of 2013.

According to Neri, Fitch has demonstrated recently that an upward outlook revision is not always a prerequisite for an outright upgrade move, like in the case of Turkey (which regained in November an investment grade from Fitch after 18 years of waiting).

No less than Fitch managing director and global head for sovereign ratings David Riley hinted on a rating upgrade in a recent conference Neri attended in Tokyo.

“He gave special mention about the Philippines and its reform momentum during a panel discussion on the prospects for emerging markets amid a tepid outlook for the United States, European Union and Japan,” Neri said.

Note that in previous years, Fitch was usually the most optimistic among the major rating agencies, Moody’s the most pessimistic and S&P somewhere in between. Now, all three major agencies have an equal rating for the Philippines of one notch below investment grade, but S&P became the most tangible harbinger of investment grade with its recent positive rating outlook.

Of course, it matters not which credit watchdog gives it first for as long as we get the real deal by 2013. Doris C. Dumlao

Tiger on the move

Ramos-era Finance Secretary Roberto “Bobby” de Ocampo resigned earlier this month from the board of Rizal Commercial Banking Corp., ostensibly to “pursue other interests.”

Well, it turns out that this other interest was, in fact, another bank.

Biz Buzz learned that the man known as “Tiger Bobby” (before the outbreak of the 1997 East Asian financial crisis) is set to be named chair of the newly revitalized Bank of Commerce.

Of course, Bank of Commerce was recently bought by Malaysian financial giant CIMB—the second biggest bank in Malaysia—and is set to unveil an aggressive expansion program in the Philippines.

Tiger Bobby (who incidentally is returning to banking prominence as foreign pundits begin to call the country a “tiger” again) will replace current bank chair Titoy Pardo who, despite being asked to stay on as chair, chose to have himself downgraded to director status. Why? Because Pardo is related by affinity to incoming Bank of Commerce president Simon Paterno, who will also sit on the board.

The CIMB-controlled Bank of Commerce will go up against another Malaysian giant, Maybank, which has also embarked on an expansion program in the Philippines. Ironically, Maybank’s mascot is a yellow and black-striped Malay tiger and rival CIMB’s corporate slogan back in Malaysia is “skin the tiger.”

But CIMB’s first task will probably be to continue the internal cleanup started by the bank’s former owner, San Miguel Corp. When SMC came in a few years ago, it found some non-performing loans that were “difficult to touch,” to say the least (because the borrowers were supposedly well connected with the current powers that be).

Will Bank of Commerce’s new owners clamp down on these past-due accounts now? Let’s watch. Daxim L. Lucas

Bye, DTI

Trade Undersecretary Cristino Panlilio is all set to leave his office by Jan. 15. Where to? It’s back to the private sector, Panlilio said in a phone interview while keeping mum on specific prospects.

Before joining government service, Panlilio had long years of experience in utility, food and banking companies. Two years and six months in government service was quite enough, Panlilio said. As for his replacement, Panlilio said he had not been made aware of who would be taking over his duties as lead promoter of investment opportunities in the Philippines. Riza T. Olchondra

All ironed out

STILL tingling with the thrill of victory from the passage by both chambers of Congress of the reproductive health bill earlier this month, Budget Secretary Florencio “Butch” Abad seems to be playing in his mind yet another slam dunk in the legislature.

“We are thinking of maybe a three-point fastbreak,” Abad said, using basketball lingo. “Maybe we can see the FOI (freedom on information bill) through the House and Senate.”

The former representative of Batanes worked not-so-behind the scene in shepherding through Congress the RH bill and the “sin tax” reform bill, with President Aquino having signed the latter into law.

Abad mentioned the FOI despite the apparent deficit of Malacañang support for the contentious proposed law. The FOI bill’s sponsors at the House lamented how the Chief Executive failed to certify it urgent, like he did with the Palace’s pet bills.

Biz Buzz would have asked him to elaborate, but our musings got drowned out by the festive mood among Palace people, who huddled to exchange war stories from the Senate.

Indeed, Abad seemed to have come from a commando operation, complete with a conspicuous battle scar on his right arm. Asked about it, he said he burned himself with a flat iron in a hotel in South Korea the previous week. It turned out he overslept and woke up just an hour before his scheduled keynote speech about the improving governance in the Philippines.

The budget chief seems to have been in demand throughout the world as an evangelist of better transparency and accountability in the government. Just last September, Abad sat as a panelist during the launch of the Better than Cash Alliance in New York. The initiative is aimed at promoting electronic payments for programs that support people living in poverty.

Abad said the Philippines had gained recognition from international bodies for pursuing several transparency initiatives, particularly with respect to using digital technology in government dealings.

More exciting days are ahead for Abad. What with the coming mid-term election and, before that, the remaining days of Congress in session.

Can he help spring more winning plays for Malacañang? That’s likely, especially if the kinks he will iron out are not the wrinkles on his shirt.  Ronnel Domingo

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Tags: Business , credit ratings , economy , Government , Philippines , Trade

  • Hayek_sa_Maynila

    We must learn from Turkey indeed where unorthodox monetary policy has been successful. BSP must learn to veer away from traditional policy prescriptions! Inflation is not our enemy. Financial instability is! especially in a world of zero interest rates and QE1,2,3…23!

  • Hayek_sa_Maynila

    Investment Grade’s coming! Biggest Threat: continued rapid PHP appreciation after 7.0% gain in 2012.

    • http://pulse.yahoo.com/_JEMNLLYAP5EA7SM3A6QUOGV62Q Chris

      so if we reach investment grade, expect more appreciation, unless the BSP will do another intervention.

      • Hayek_sa_Maynila

        not necessarily…Rupiah weakened after investment grade. appreciation is unsustainable and therefore, on the net, not good for the economy.



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