More firms seen to tap capital market for expansion

Manila, Philippines - Rapidly expanding local firms will increassingly turn to the capital markets to satisfy their huge appetite for fresh funds, according to the local unit of the Dutch financial giant ING Bank.

ING Bank, which was behind the recent major bond listing of San Miguel Brewery Inc. (SMB), said many Philippine banks for instance, are gearing up for higher capital requirements under the global Basel III agreement.

Most financial institutions are flexing their financial muscles for expansion to keep up with the region’s growth momentum, as demand from domestic institutional investors is rising.

“We just need to look at the performance of the local currency and domestic bonds that reflect this trend,” Johnson Sia, head of financial markets at ING Manila, said.

The Philippine peso is currently one of the best-performing Asian currencies year-to-date. It has returned to the 41 to the dollar level and is forecast to remain in the vicinity of 42 to the end of the year.

The local currency continues to strengthen against the greenback on the back of the continuous inflow of overseas Filipino remittances, stronger performance of the business process outsource (BPO) and export receipts.

Meanwhile, outstanding tradable corporate debt on the Philippine Dealing Exchange (PDEx), the country’s fixed-income securities and investment exchange, has already breached the P200-billion mark as of end-April.

The Philippines also had the fastest quarter-on-quarter pace of growth in the last quarter of 2011 among the region’s corporate bond markets, according to the Asian Development Bank’s (ADB) Asia Bond Monitor released last April.

“The Philippine capital market will continue to attract more investor interest because we have world-class companies that offer great shareholder value,” ING Bank officials added.

ING Manila has consistently ranked among the top five spot foreign exchange dealers in the last five years by PDEx. It was also cited as one of the Top 5 corporate issue managers and arrangers at the 7th Philippine Dealing System (PDS) Awards.

ING was lead issue manager and arranger of San Miguel Brewery’s new fixed-rate bond issuance of seven-year and 10-year tranches. The beer maker has been the leading listed private debt issuer in terms of trading volume, accounting for 11 percent of total corporate securities traded in the market.