US stocks rose as debt ceiling is temporarily suspended, better-than-forecast earnings. IMF forecasts second consecutive recession for Eurozone but optimistic about the outlook for the region, provided it keeps up the pace of reform. Investors are also keeping an eye on the World Economic Forum in Davos, Switzerland, where business and political leaders have gathered to discuss economic issues.
CPG, LR, MPI, DMC, RLC, SMC, TEL, TV5, Cement, IMF – PHL GDP, Gov’t securities, Remittances, Inflation, Foreign Portfolio Investments, P-NOY in Davos (Switzerland).
U.S. stocks rose, after benchmark indexes reached five-year highs, as lawmakers voted to temporarily suspend the federal debt limit and technology stocks rallied amid better-than-forecast earnings.
Local / News
CPG surpassed 2012 pre-sales guidance, up 16.6% to P21.4 billion and expects strong demand for its residential projects to be sustained this year. Century Properties plans to complete and deliver by yearend five buildings with 4,607 units and net saleable area of 200,564 square meters.
LR to issue P1.75 billion perpetual preferred shares at dividend rate of 8.5% through a private placement to finance the casino complex being built with BEL, the Techzone project In Makati, the Midas Hotel along Roxas Boulevard and finance the acquisition of additional bingo sites.
The Preferred shares will be taken out of the pending increase in its authorized capital stock from P1.6 billion to P5 billion. The increase involves 2.5 billion shares of common stock and 2.5 billion preferred shares, each with a par value of P1 per share.
MPI sold 1.33 billion common shares at P4.60 apiece via private placement (6.31% discount to previous close), raising P6.12 billion to finance its entry in new businesses as well as the expansion of its toll road and water distribution units. The company wants to pursue PPP projects – Light Rail Transit (LRT) 1 operation and management, Mactan-Cebu International Airport expansion, and the Cavite-Laguna (CALA) expressway.
Some of the proceeds will also be used for the recently approved NLEx-SLEx road project which is estimated to cost P25.5 billion. Unit Maynilad Water Services Inc. plans to spend P17.2 billion for capex this year.
(MPI, DMC) Maynilad said it plans to more than double spending on water projects to Php 17.2 billion ($423 million) this year, its biggest capital investment since it was privatized in 1997; will use internal funds and a loan from the World Bank to finance its infrastructure spending.
RLC will launch 6 residential projects, more than the 4 originally planned this year with residential segment turning out to be more robust. These projects will be located in growing central business district areas such as Ortigas, Manila and Quezon City. The company will boost capital spending to P13 billion in its fiscal year ending September 2013 to bankroll land acquisition and construction. Last year, the property developer launched 5 projects.
Note: RLC posted a 7% increase in net income to P4.2 billion in its fiscal year 2012, slower than the 10% growth to P3.97 billion in 2011. RLC has 4 different business segment - residential, shopping center, office leasing and hotel.
SMC launched a tender offer to buy back $600 million worth of convertible dollar-denominated bonds to trim down debt levels, “refinance its existing financial obligations… under terms favorable to the company.” SMC also applied for a six-day suspension of trading of its shares. Originally due 2014, the tender offer will last a day on Jan. 29, 2013. SMC expects to post a strong double-digit compounded annual growth rate, driven primarily by the earnings contributions from our new businesses, mainly power and Petron. From Jan. – Sept., the co,pany posted a net profit of P19.2 billion up 61% from the same period a year earlier.
TEL has signed a $300 million club loan with four banks, a source says. The five-year term facility, which has an average life of three years, was signed earlier this month and pays an all-in rate of about 200 basis points.
TEL to pour more money into TV5. Last year, TEL approved a P6 billion investment by unit ePLDT which bought Philippine Depository Receipts (PDRs) of TV5 and Cignal TV – P4.8 billion would finance TV5’s state-of-the-art Media Center in Mandaluyong (expected to be completed Q1 2013), P1.2 billion to expand the operations of Cignal. Losses in the second half of 2012 would likely mimic the P2.8 billon hemorrhage in the January to June period. TV5 will spend P6 billion this year to launch new programs and complete the Media Center.
Local / Sector
Cement sales hit a record, up 17.5% to 18.4 million tons. In 2011, the industry eked out a 1% gain to 15.6 million from 15.4 million in 2010. Last year, sales got a boost from faster roll-out of gov’t. infrastructure prjects and consumer confidence. This year, the cement industry is confident of “significant growth” as election spending is expected to help jack up sales.
Local / Economy
IMF raised 2013 PHL growth forecast to 6% from 4.8% citing robust consumer spending and rising domestic investments; increase in public spending, aided by an improvement in the government’s fiscal standing, would help in boosting the country’s economy this year. 2014 growth is expected at 5.5%. Inflation forecast – 3-5%, BOP to stay in the surplus.
Interest rates on government securities may slow down further in 2013 as rising remittances and foreign portfolio investments boost demand for the virtually risk-free debt notes.
- Remittances to grow by at least 5% in 2013 from the estimated $21 billion of last year
- Foreign portfolio investments would rise given the favorable outlook on the local economy and anticipation of investment grade this year due to sustained economic growth, declining debt burden of the government and greater stability of the banking sector.
- Inflation will likely stay modest, subduing the rise of interest rates on treasury bills and bonds
- Lower supply of debt notes is seen to pull down interest rates on government securities; government’s declining budget deficit would result in lower volumes of securities to be issued by the Bureau of the Treasury
Note: During the last auction for T-bills held on Jan. 7, the 91-day debt paper fetched a mere 0.05% from the 0.198% recorded in December. The 182-day bills also fell, fetching a rate of 0.3% from 0.52% the previous month.
P-NOY to debut at international forum in Davos, Switzerland as PHL is in With the PHL in the “global economic spotlight.” P-NOY to invite more investors and tourists to come to the Philippines to create more jobs and sustain the country’s economic momentum beyond his term.
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