Bangko Sentral ng Pilipinas (BSP) [link] said that it’s “very dangerous” for the BSP to “cut rates faster than the US”, even in situations where our inflation rate is falling faster, due to the pressure that could place on the value of the peso relative to the US Dollar. BSP Governor Felipe Medalla said that, if inflation were to fall to 3% by the end of the year, it would be difficult to justify maintaining interest rates at 6.25%, and said that in that case, it might not harm the peso to lower rates “because the markets know we have more than enough reserves”, implying that the BSP could intervene and spend its reserves to prop up the value of the peso in such a hypothetical.
MB Quick Take: I appreciate how much of an open book Mr. Medalla is, but all of these messages kind of boil down to a signal that the BSP isn’t ready to stop following the US any time soon. This just feels like some bluster and chest-puffing to reassure people that the BSP has a healthy inventory of US Dollars that it could sell, and that our inflation situation might be better than theirs.
Ninoy Aquino International Airport (NAIA) [link] is the subject of another unsolicited rehabilitation proposal by another consortium of “tycoons”, this time including Alliance Global [AGI 12.94 3.5%; 208% avgVol], Aboitiz Equity Ventures [AEV 54.30 1.3%; 64% avgVol], Ayala Corp [AC 633.00 1.1%; 62% avgVol], Filinvest Development [FDC 5.25 7.9%; 276% avgVol], and JG Summit [JGS 49.25 0.5%; 20% avgVol]. The total proposal is worth P100 billion and includes “upfront payments” to the national government. The consortium hopes to double NAIA’s current operating capacity by 2028.
MB Quick Take: Will this group of “patriotic” tycoons succeed, or will they crash and burn like the many proposals that have come before? Hard to say. This one is basically the same group as the previous one, minus Lucio Tan and Metro Pacific [MPI 4.26 4.4%; 336% avgVol]. It feels like this is more of a political question than a financial or economic one, as we saw back under the Duterte administration when Megawide’s original proponent status was stripped and it was kicked out of the process after a sudden and jarring change of course by the Department of Finance and the Department of Transportation.
AREIT [AREIT 33.50 1.5%; 38% avgVol] [link] said that it will infuse P22.5 billion worth of malls and office buildings this year from AREIT’s sponsor, Ayala Land [ALI 25.95 1.7%; 58% avgVol]. AREIT said that after the infusion, AREIT will hold just 10% of ALI’s total malls and 42% of ALI’s total offices, leaving “significant room for growth”.
MB Quick Take: The first REIT has taken a beating over the last year and a half due to inflation’s impact on interest rates, and the subsequent impact of those rate increases on the yields of fixed-income investments, like REITs. When everything else is equal, if yields go up (to compete with other fixed-income products), prices must come down. That said, AREIT is only one of three REITs that have consistently delivered stable or growing quarterly dividends for a year or more (the other two being RL Commercial REIT [RCR 5.70 0.3%; 113% avgVol] and Citicore Energy REIT [CREIT 2.47 0.4%; 79% avgVol]), and AREIT’s done it 10 quarters in a row.
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