FUND-RAISING on the local bond market will likely amount to P100 billion by the yearend, the top executive of the Philippine Dealing & Exchange (PDEx) said, as the financial system remains awash with cash.

“We’re still optimistic that we’ll hit our original target of P100 billion,” PDEx Chairman and Chief Executive Officer Cesar B. Crisol told reporters after the ceremonial listing of P15 billion worth of bonds issued by SMC Global Power Holdings Corp. in Makati City on Monday.
 
Five companies have already issued and listed fixed-income securities with an aggregate value of P45.96 billion, including the bonds issued by SMC Global for P6.15 billion due 2021, P4.09 billion due 2023 and P4.76 billion due 2026 and by Ayala Corp. for P7 billion due 2023 this month.
 
This year’s issues also include short-term commercial papers worth P3.5 billion and P1 billion from Phoenix Petroleum Philippines, Inc. and SL Agritech Corp. and fixed-rate bonds worth P8 billion due 2026 and P7 billion due 2025 from Ayala Land, Inc. 
 
“Based on the applications with the SEC (Securities and Exchange Commission) and what the underwriters are packaging right now — just this month we’re raising P35 billion — that’s already an indication,” Mr. Crisol noted.
 
The corporate regulator, in an en banc meeting on Friday, cleared the shelf registration of SM Prime Holdings, Inc. for bonds amounting to P60 billion. The company will issue an initial tranche of P10 billion and the remainder within three years.
 
“We are targeting listing the bonds by end of this month,” SM Prime Vice-President for Finance Teresa Cecilia R. Agsalud said via e-mail. 
 
The P100-billion target of PDEx in terms of fund-raising, however, stands “conservative” because the uncertainty from the leadership change in the Philippines and economic slowdown abroad muted the market in the first semester, Mr. Crisol noted.
 
“So, now we’re basically on the domestic front, we’re optimistic. The regional growth has been recovering. The only concern really is Europe and probably a little slow economic upturn in the United States,” he added.
 
The PDEx executive expects companies engaged in infrastructure development as well as holding firms among those likely issuing and listing bonds for the rest of the year.
 
“It’s, I guess, [an] affirmation of the confidence in the economic plans of the new administration, so again, infrastructure is a focus like this one,” Mr. Crisol said.
 
Justino Juan R. Ocampo, executive vice-president at First Metro Investment Corp. (FMIC), deemed the P100-billion target for fixed-income issues achievable, given the new government’s thrust to accelerate spending on infrastructure projects.
 
“With the new administration acknowledging our infrastructure deficit, we expect infrastructure spending to take a more accelerated pace and at this time, we’re expecting not just Mega Manila but even the countryside,” Mr. Ocampo said in a midyear briefing in Makati City on Monday.
 
“As a result, we see large corporations… to keep up with the growth expectations. We affirm our earlier expectation that capital market activity in the second half will accelerate,” Mr. Ocampo added.
 
In the first six months, fund-raising activities on the Philippine Stock Exchange declined by 46% to P55.6 billion from the P103.84 billion recorded a year earlier. Bond issuances likewise dropped by 42% to P15 billion from P26 billion.
 
Companies preferred to tap the banks for their funding requirements, as the excess liquidity in the financial system allows lenders to offer competitive interest rates, BDO Capital & Investment Corp. President Eduardo V. Francisco noted.
 
“The nice problem that the market has is even if I want to develop the capital markets, there’s so much liquidity,” Mr. Francisco told reporters after the ceremonial listing of the SMC Global fixed-rate bonds.
 
“If I want to do a bond, you spend for SEC [registration] and then you have to get credit rating, so when you add all the cost in, you probably spend half a percent more to do a public issue. If you go to the banks, it can be approved overnight and you can save 50 basis points,” Mr. Francisco added.