Peso down, foreign currency up

Insurance companies increased its appetite for foreign currency-denominated investments last year reflecting the poor state of the national economy. Even corporates or huge conglomerates turned to the foreign currency market for its lending through bond offerings.

Investments last year registered one of the lowest in terms of peso-denominated products while euro-denominated investment products gained more followers.

Records from the Insurance Commission (IC) of partial investments indicate that insurers last year made peso investments worth a mere P3.233 billion in various government and private sector products. In 2002, peso-denominated investments nearly hit P10 billion. In 2001, it was P14.47 billion and the year before that P13.15 billion.

In stark contrast, foreign currency-denominated investments increased tremendously. US dollar-denominated investments reached $126.6 million while euro-denominated increased to 4.2 million euros.

Biggest investments in foreign currency-denominated products were last recorded in 2000 amounting to $134 million while it slightly decreased to $62.7 million in 2001.

Members of the Yuchengco Group of Companies (YGC) and First Nationwide Assurance Corp. made the 2.25-million euro investments last year. Malayan Insurance Co. made a two-million euro investment in ROP Bonds while Malayan Reinsurance Corp., Malayan Zurich Insurance Corp., and First Nationwide Assurance each made investments worth 750,000 euros.

Some of the dollar-denominated investment instruments that attracted a lot of attention were: the ROP nine-percent global bond due 2013; ROPs 09, 13, 14, 16, 19, 24 and 25; the ROP 2009 Eurobond; ROP 2013 Global/Eurobond; Treasury Bills issued by the US government; five-year US Dollar bond issue of the Ayala Corp.-International Finance Ltd.; BSP 27-dollar denominated bonds; RP Interest Reduction Bond Series 2008; and, US Government Bonds.

There were also dollar-denominated investment instruments issued by the private sector.

Among them were: credit linked notes of HSBC; Metrobank Tier 2 Bonds; investment in 5.125-percent accumulator inverse floater US dollar deposit issued by HSBC; Banco de Oro Universal Bank senior notes; JG Summit Holdings Phils. Ltd. five-year eurobond; Equitable PCI Bank dollar subordinated notes; Philam Dollar Bond Fund; dollar bonds issued by Subic Power Corp. and AC International Finance Ltd.