Did RCBC lose a bundle in Code NGO deal?

A position paper released under the name of Malacañang speechwriter and DBP director Alex Magno asserts that "it was RCBC, not government, that bore the cost of the P1.8-billion windfall that was enjoyed by Code NGO." Alex didn’t really write the paper but he is the President of the Foundation that tasked its executive committee to produce the paper.

Anyway, the position paper concludes that it was RCBC which suffered "an inordinately low yield on this instrument when they bought the bonds on a secondary basis from CODE NGO. Whether this resulted from philanthropy and social spirit, miscalculation or contractual constraints that required RCBC to provide fees to CODE NGO even in a transparent auction where they would have been entitled to participate anyhow, or a combination of the above, is a private matter."

Funny, ha? RCBC voluntarily and willingly losing that much for charity? Or paying a fee for nothing because the process is transparent? If they did that for charity, I would have heard from my old friend, Virgil Pantaleon, who helps out with PR for the Yuchengcos. I don’t think they would give away over a billion pesos quietly when there are brownie points to be earned that could in turn, earn hard cash down the line.

Yet, Alex Magno’s foundation says that "rather than agitation and outrage, there would simply be great curiosity as to why RCBC overpaid for the bonds. If any, the sparks will fly not in the halls of Congress but in the boardroom and shareholders’ meeting of RCBC."

That’s simply not what I hear from RCBC insiders. Of course they made money and could have made more if they did not stop selling the bonds after the controversy broke out. The analysis of Alex’s foundation may be logical, but is just not the case.

My gut feel tells me that the National Treasury could have gotten better bids if the bond features were better explained and bidders had more time to study and compute. As the National Treasurer admitted to a Senate panel, they were getting calls requesting for clarifications even as the bidding was on-going.

Nice try for the foundation of Alex Magno! It had compelling arguments in their paper to extricate the GMA administration from the Code NGO mess. But you have to stop laughing first. Come on, guys… RCBC losing a bundle on a deal with their trained bankers’ eyes wide open?

Manny’s not Ronnie’s

A clarification is in order. It was Manny Zamora’s daughter who took the ADB seat during Erap’s time, not Ronnie’s. The mistake does not diminish the point we made about such appointments… outright inappropriate. But our apologies for the factual error, anyway.

Angel Ramos

I received this e-mail from Angelita Ramos, daughter of FVR regarding a column item last Wednesday.

I do not know what you heard, but allow me to enlighten you and set the record straight. I have never put forth an application to be appointed the Philippines’ representative to the Asian Development Bank nor has the position been offered to me. Both my father and I hold Dr. Paderanga in highest esteem and I have no intention of displacing him at the ADB.

I wish journalists like you would exercise more professional responsibility rather than jumping so readily into the fray, thus creating more rumors and intrigues. You should have done your homework with regards to my own professional qualifications, experience, and academic background before making such an unfair and negative public judgment about me.

I did check the story out and it was confirmed by people who should know. I did my homework on you, too, and while you have impressive credentials, I didn’t think you had the stature to be our representative at the ADB just yet. While you might not have placed an application to be appointed, your father might have.

Journalists have to be vigilant too in this country, given the number of backroom deals that are hatched daily. If by exposing something before it happens stops it from happening, we would have accomplished our duty to our people. But if as you say you have no intention of displacing Mr. Paderanga at ADB, I guess that settles it.

I take it you won’t get the job even if offered. I am so sorry for the public judgment. I don’t know you, you don’t know me so there is nothing personal. You must know by now that goes with being FVR’s daughter

CalPERS scalped

The decision of California pension fund CalPERS to pull out of Asean was not too surprising to some money men given CalPERS’s bad record of investments in the region. In the Philippines, as cited in the last column, they lost a bundle in All Asia. I understand they were enticed to invest in All Asia by IFC, the World Bank subsidiary that lost even more in the Makati investment firm. Now, IFC is raising hell and CalPERS is going away.

Okay, so what’s the big deal? Business Week reports that the fund only had $200 million or so in Malaysian stocks and much smaller holdings in Thailand, Indonesia, and the Philippines. The real problem, BW points out, is that its move may set a precedent for other US pension funds. In other words, the CalPERS big announcement that it is going away can cause some investors to reconsider decisions to invest here now.

That would be a pity for the region because we need investments desperately. And as BW observed, "foreign investors had finally been starting to make their way back to these markets." A Singapore currency analyst for Bank of America interviewed by BW reports that "there have been huge equity inflows in the last few week."

The same analyst cited the spreads on Philippine bonds as another good sign. Today, the difference between Manila’s government bonds and US Treasuries is 459 basis points, he says, vs. 690 last fall. The narrowing difference reflects increased investor confidence. "There’s much less of a risk premium being priced into these bonds."

Of course, it’s possible that other investors will ignore CalPERS and continue their slow return to Southeast Asia. It is however interesting that BW pointed out that "the California fund has a reputation for being a leader in the fight for corporate transparency and minority-shareholder rights." CalPERS knows how it is to be screwed in markets like ours. They had first hand experience in All Asia.

If CalPERS says Southeast Asia doesn’t win its seal of approval, it could be more for a struggle for guys like Mar Roxas to convince foreign investors that governments and companies are growing more responsible. Specially because they are not seeing any movement from local subsidiaries of firms like Arthur Andersen towards more reliable financial reports.

Reflections

From Dr. Ernie E.

Look at the world around you, and you’ll see God’s creativity;

Look at the dinner table, and you’ll see God’s providence;

Look at the mirror, and you’ll see God’s sense of humor

(Boo Chanco’s e-mail address is [email protected])