WITH 11 months left in the term of Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr., regulators are working hard to implement much-needed reforms meant to put the country’s financial markets on equal footing with its regional peers.
One such reform measure is a formal repurchase agreement scheme, or “repo” in banking parlance. The system makes it possible for one party, whether a financial institution or an individual, to sell bonds to another party and, as agreed at the outset of the deal, “repurchase” them at a preset price on a predetermined future date.
Repos—a scheme common in more advanced economies—will make it possible for anyone who may need bonds on short notice (to engage in legal short selling, for example) or anyone who has bonds lying around idly to make a profit whichever way the market goes.
But one key player in this BSP reform measure is the Bureau of the Treasury, from where all government bonds emanate and where all these bonds are kept. And that’s where one key problem lies, Biz Buzz learned.
According to our sources, the repo scheme being proposed by the BTr to the BSP will allow only “a few big banks” to engage in this much awaited measure. This is upsetting some of the smaller financial institutions that are counting on this key market reform to level the playing field between themselves and their bigger rivals.
As it stands, the BTr deals only with 40 or so banks for its treasury bill and treasury bond operations. Of this number, only about half are actively using their privilege. But what riles smaller banks is that this number will be whittled down further when it comes to the repo market.
“Only a select few will be allowed to do repos if the ‘bright boys’ of BTr have their way,” said one banker, referring to some Finance officials who were seconded to the BTr in the past to help National Treasurer Roberto Tan formulate policy.
The smaller banks are also worried that the selection of these “few big banks” that will be allowed to deal with BTr for repos directly will be made on an arbitrary and non-transparent manner.
“If BTr likes you, you’re in. If not, sorry na lang,” said another worried banker. “If you’re not on that list, you’ll have to go through these accredited banks and pay them a fee to engage in repos.”
More alarmingly, a smaller bank using the services of a bigger bank to transact repos exposes the former’s market strategy to the latter. Who knows what the bigger bank will do with that confidential information if it knows exactly how the smaller bank is trading? Ride the wave and make more money? Or take an opposing trading position? Who knows?
Thankfully, we were told that Finance Secretary Carlos Dominguez III had asked the BTr to review this scheme with an eye toward creating a scheme that would accord the same privileges to all market players, big or small. We’re keeping our fingers crossed. Daxim L. Lucas
Fair pricing
VOLUNTARY or not, the Securities and Exchange Commission has vowed to ensure a fair pricing for the shares of Liberty Telecoms Holdings following Globe Telecom and PLDT Inc’.s joint purchase of San Miguel Corp.’s telecom assets under the Vega Holdings which, in turn, owns 87 percent of Liberty.
“It doesn’t matter if it’s mandatory or voluntary because in this case, they have already indicated that they will make a tender offer,” SEC Chair Teresita Herbosa said.
If the corporate regulators deem that the transaction is subject to the tender offer rule, the price will be based on the value at which the duopoly had bought the controlling stake. It may be very low or very high but minority shareholders will get the equivalent value for their shares in Liberty, which owns the majority of the coveted 700 Mhz broadband frequency.
On the other hand, if it’s a voluntary tender offer, the offerors (PLDT and Globe) can set their own price.
“Even if it’s voluntary, you would need fairness opinion and it will approximate price for the sellers,” Herbosa said.
Philippine Stock Exchange president Hans Sicat, in a separate interview, said the PSE was not involved in price discussions, whether it’s an initial public offering, private placement, buyback or tender offer. But at the very least, Sicat said the PSE would ensure disclosure to investors on why a company was doing a tender offer and how the pricing was determined.
The enforcement of the tender offer requirement—that which protects minority shareholders by giving them the opportunity to exit when there’s a change in shareholder control—is in the realm of the SEC.
“We still have to look into the fairness,” Herbosa said. To date, the telco duopoly has yet to determine the price for the proposed tender offer. In the meantime, the deal is still undergoing scrutiny by the newly-formed Philippine Competition Commission. Doris Dumlao-Abadilla
Pokemon Go in Vis-Min
IT’S NOT only the shopping malls in the metropolis that have seen increased foot traffic from people who are hooked into the Pokemon Go gaming sensation. The craze has reached provincial malls as well, according to property developer DoubleDragon Properties, whose business model has been to set up shop in provincial areas long before longtime Davao City Mayor Rodrigo Duterte was thrust into the presidency.
DoubleDragon founder and co-chair Edgar “Injap” Sia II said Pokemon Go hunting had reached the company’s CityMalls, too. “It looks like the Ghost Month was spiced up by the Pokemon Go craze!” he said.
Among DoubleDragon’s CityMalls, Sia said it was the one in Zamboanga City that had seen the highest influx of Pokemon Go hunters and trainers. To recall, this was the same mall where SM Retail—which debuted in Zamboanga through CityMall late last year—ran out of inventory, indicating the growing purchasing power of the people.
The Pokestops in CityMalls, Sia said, had been voluntarily created by the app developer without any commercial arrangement with the mall developer.
“I think they placed it in strategic areas where it will be convenient for the people in that community to access,” Sia said.
“We also have some retail locators that give some perks to those who catch Pokemons in the premises of CityMall,” he added. Doris Dumlao-Abadilla
Center of the universe
THE GOVERNMENT last week announced the impressive 7-percent second-quarter GDP growth during a press conference in the country’s new center of power, Davao City—the first time such briefing was held outside “Imperial Manila”.
But the Neda and Philippine Statistics Authority officials said it wasn’t because President Duterte’s hometown was now being favored over Metro Manila or any other city. It just so happened that Neda chief Ernie Pernia also had to attend the two-day Social Development Initiatives Summit in Davao City, whose second day coincided with the earlier scheduled second-quarter GDP performance announcement.
That summit—attended by a number of Cabinet officials, including Vice President Leni Robredo, DBM chief Ben Diokno, among others—was aimed at crafting the Duterte administration’s social development agenda.
Pernia said it would be unlikely to again hold the regular Neda and PSA-led press briefings on the quarterly GDP reports in Davao City, although President Duterte wanted Cabinet meetings being held during the first Monday of the month “to go the regions,” not just in Manila or his hometown.
“The plan is, the next Cabinet meeting will be in Cebu. That is what I heard; I don’t know how firm that plan is,” he said.
As for the press conference on the second-quarter GDP performance, National Statistician Lisa Bersales said it helped that top Neda officials were already scheduled to attend the summit, so they only had to fly in PSA personnel to assist during the briefing.
Bersales said they had shelled out for plane fares and hotel accommodations, although the expenses were not significant, without disclosing figures.
Neda flew in to Davao a number of journalists to cover the event, while the mostly Manila-based beat reporters had access to live teleconference and streaming of the briefing.
There was not much difference between the regular briefings being held in Manila, although one reporter was unable to clearly throw her question to the officials in Davao City.
Holding the press conference in the President’s hometown nonetheless allowed Davao City- and Mindanao-based media to ask questions pertinent to the Duterte’s administration’s plan to spread development more and more outside Metro Manila—a welcome thing, we say. Ben O. de Vera
Luxury condo turnover
THE FIRST of its luxury units are set to be turned over to their owners next month, but Horizon Homes at Shangri-La at the Fort still has a few more luxury units left for the taking.
The biggest ones are already taken—several bought during the run-up to and immediately after the May elections, Biz Buzz heard—but there are still units available such as 250 sq m 2-bedroom unit , 318-384 sq m 3-bedroom unit and 418 sq m for 4-bedroom condos.
The price comes down to P305,000 a sq m, exclusive of VAT and parking slots. And although prices start at P80 million, future homeowners get to live in a prime block of BGC, near retail stores, restaurants, a hospital and the unified Philippine Stock Exchange.
All told, there are 98 residences in the gleaming high-rise that sits atop the 5-star hotel, boasting of sweeping views of BGC, all the way to Laguna Lake and beyond.
Horizon Homes residents will enjoy a private driveway and lobby, exclusive amenities separate from the hotel and a full unit equipped with two kitchens: The main kitchen has a Subzero double-door refrigerator and freezer, Miele brand wall oven and induction hob, Miele dishwasher and built-in wine cooler. The wet kitchen is furnished with SMEG gas burners and a wall oven plus Whirlpool washer/dryer. The general manager of the Shangri-La will also be managing the property.
Horizon Homes is the only residential project of its kind in the global portfolio of the Kuok Group, which is composed of more than 90 hotels and resorts around the world. So those who have at least P80 million, or more, lying around… you know what to do with it. Daxim L. Lucas
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