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PHL urged to expand presence in global bond market

PHL urged to expand presence in global bond market

By Luisa Maria Jacinta C. Jocson, Reporter

THE Philippines should further diversify its borrowing sources and expand its presence in the global bond market, analysts said.

“Given the country’s credit rating and its commitment to pursue its infrastructure program. Definitely, the government can still expand its borrowings,” Jonathan L. Ravelas, senior adviser at professional services firm Reyes Tacandong & Co., said in a text message.

Last week, National Treasurer Rosalia V. de Leon said that the government is looking to issue Islamic bonds or Sukuk bonds by yearend or 2024. This would mark its first issuance in the Islamic bond market.

“The Philippine government’s plan to debut in the Islamic bond market with a Sukuk issuance is a strategic move that could diversify its investor base and potentially offer more favorable terms. Coupled with its $5-billion program for commercial bonds, the government is evidently keen on robust external financing,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

This year, the government’s borrowing plan is set at $2.207 trillion, consisting of P1.654 trillion from domestic sources and P553.5 billion from foreign sources.

The government is planning $5 billion (around P283 billion) in global bonds this year.

In January, the Philippines already raised $3 billion from its first US dollar bond issuance for the year.

Mr. Roces said it could be beneficial to expand borrowing options beyond commercial and Sukuk bonds.

“Markets like Euro bonds and Samurai bonds offer low-interest rates, while green bonds could attract investors focused on sustainability,” he said.

The government, under President Rodrigo R. Duterte, had raised €2.1 billion (P122.4 billion) from a triple-tranche offering of euro-denominated bonds in April 2021. In April 2022, it raised 70.1 billion Japanese yen from a four-tranche Samurai bond offer.

Mr. Roces said the sustainability of this borrowing strategy “will be a function of the country’s overall debt level and fiscal health, which remain manageable.”

The government had ramped up borrowings at the height of the coronavirus pandemic. As of end-June, the National Government’s outstanding debt as a share of gross domestic product stood at 61%, lower than 62.1% from the same period a year ago.

However, it is still slightly above the 60% threshold considered by multilateral lenders to be manageable for developing economies.

“Diversifying borrowing sources should help mitigate risks and provide balance in the financial portfolio. Also, given the global dominance of the US dollar, the US market offers significant liquidity. However, it does come with currency risks given the current environment,” Mr. Roces said.

The government is still targeting a US-denominated retail Treasury bond offering by the end of the month.

“I think the plan to borrow retail dollar bonds is a good way to tap our overseas Filipino workers (OFWs) who may lack access to good investment outlets for their hard-earned money,” a trader said in a text message.

“It is always good for the government to have different borrowing sources. However, I think the BTr will still have to source more borrowing locally given the domestic liquidity,” the trader added.

The government’s borrowing mix favors domestic sources (75%) in order to mitigate foreign currency risk.

Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila, said domestic borrowings are still the safer option.

“Borrowing in foreign debt is generally carried out to take advantage of lower borrowing costs abroad or to deepen the market for Philippine debt. Despite the ability to borrow in foreign currency, the bulk of the borrowing remains domestic in nature in order to safeguard against too much currency and interest rate risk,” he said in a Viber message.

“Currently, the Philippines is awash with cash and perhaps borrowing in local currency will still not result in a substantial tightening of financial markets,” he added.

Mr. Mapa also said that the country’s investment grade status could also help offset high interest rates.

“Rates, however, are relatively high and there remain uncertainties regarding exchange rates and policy direction. Despite this, given our investment grades status, the Philippines may still be able to secure debt at relatively affordable rates,” he added.

The Philippines’ credit rating is currently above the minimum investment grade across three major debt watchers, with S&P Global Ratings at “BBB+,” Fitch Ratings at “BBB,” and Moody’s Investors Service rating the country at “Baa2.”

#PHL #urged #expand #presence #global #bond #market

WTO warns against global trade split-up

WTO warns against global trade split-up

By Norman P. Aquino, Special Reports Editor

GENEVA — Geopolitical tensions and recent crises have spurred protectionist policies that are slowly eroding the world’s trading system and could ultimately fragment the global economy, the World Trade Organization (WTO) said, as it called for a renewed drive toward a broader and more inclusive integration.

In its annual Global Trade Report released on Tuesday, the world’s biggest economic organization said the tariff escalation between the US and China has slowed trade growth between them, while there have been signs of trade reorientation along geopolitical lines since Russia invaded Ukraine in February 2022.

Despite these challenges, international trade continues to thrive, and talk of de-globalization is on balance still far from supported by the data, Ralph Ossa, the WTO chief economist, told reporters at a news briefing in Geneva.

“We need to embrace trade instead of rejecting it if we want to overcome the most pressing challenges of our times,” he said. “The report makes the case for extending trade integration to more economies, to more people and to more issues — a process we call re-globalization.”

A strong multilateral trading system is the “best guarantor of economic security” because it provides the options needed when faced with supply shortages, Mr. Ossa said, citing the global coronavirus pandemic as an example.

In the report, the WTO said globalization must evolve in response to new challenges and needs to be accompanied by appropriate domestic policies.

“Re-globalization offers a better path forward,” WTO Director-General Ngozi Okonjo-Iweala said in the foreword of the 134-page report. “Bringing more countries and communities from the margins of the global economy to the mainstream would make for deeper, more diversified markets that are more resilient to shocks.”

Globalization — and WTO — critics have said the WTO’s consensus system needs to be replaced by a new negotiating model that meets 21st century problems including climate change, environmental destruction, low labor standards, human rights and corruption. They are also calling for bilateral and plurilateral deals to level the playing field.

“The WTO is concerned because the issue of trade and commerce has been politically tainted,” Philippine Chamber of Commerce and Industry President George T. Barcelon said by telephone before the WTO event. “Once it’s tainted, it will hold back actions that should come into play in the free market. The Philippines is having difficulty already in the supply chain especially during the coronavirus disease 2019 (COVID-19) pandemic. After that, some countries added another layer by weaponizing trade.”

This has especially affected the agriculture sector, which is heavily dependent on imported inputs such as fertilizer that comes from Russia, Belarus and Ukraine, where there is a war, he added.

“I am all for re-globalization, as long as the WTO can get people to follow the rules.”

In the report, the WTO noted that with security considerations becoming an increasingly influential factor in trade policy, some countries might reshuffle trade relationships due to tensions, but taking this too far would be counterproductive.

“The long-term evidence suggests that trade has contributed positively to peace among nations,” according to the report. “With regard to economic security, recent experiences with the COVID-19 pandemic, extreme weather events and the war in Ukraine have demonstrated how deep and diversified international markets help countries cope with unanticipated shortages by securing supplies from alternative sources,” it added.

Global trade flows have been resilient throughout past shocks, the WTO said, adding that trade costs keep falling as digital technologies facilitate international transactions and economies continue to sign integration deals.

The 164-member trade group admitted that there have been longstanding issues on its agenda, particularly agriculture, which accounts for a big employment pie in many member countries.

For one, trade costs in agriculture exceed those in manufacturing by 50%, penalizing poorer segments in society that rely on this sector.

Still, the WTO said it is already making a difference here — recent research found that its Trade Facilitation Agreement has had disproportionately positive effects on agricultural trade since it took effect in 2017, with least developed countries posting a 17% increase in agricultural exports as a result.

“Trade can be a powerful magnifying force of domestic competitiveness reforms, but in the absence of such domestic reforms, its role is limited,” Mr. Ossa separately told BusinessWorld in an e-mailed reply to questions. “That said, much remains to be done in the area of agricultural trade policy reforms.”

Trade costs in agriculture are 46% higher than in manufacturing, holding back agricultural exports around the globe, he said, citing the 2023 Global Trade Report. “While not all of this reflects policy barriers, it points to substantial unfinished business in multilateral trade negotiations.”

Mr. Ossa said de-globalization has not happened yet, noting that China remains the biggest trading partner for many economies including the Philippines.

He does not expect this to change soon. He noted that bilateral trade between China and the US reached a record $690.6 billion (P39 trillion) in 2022.

Mr. Ossa said trade was remarkably resilient during the COVID-19 pandemic, bouncing back to pre-pandemic levels less than a year after the first wave of lockdowns.

Trade in digitally delivered services remained strong all along, growing at an average annual rate of 8.1% between 2005 and 2022, outpacing goods (5.6%) and other services (4.2 %).

“But the warning signs must be taken seriously,” he said. “In the report, we looked at trade within and between hypothetical geopolitical ‘blocs’ constructed based on voting patterns in the United Nations General Assembly,” he said.

Goods trade flows between these “blocs” have grown by as much as 6% more slowly than within these ‘blocs’ since the onset of the war in Ukraine, indicating a shift toward friend-shoring, Mr. Ossa said.

“We also report an increasing level of trade concerns being raised about unilateral policies of trading partners at the WTO and the International Monetary Fund has reported a fragmentation of investment flows,” he said.

“All of this will eventually be reflected in reduced trade growth unless countries re-embrace multilateralism or re-globalization,” he added.

The WTO’s next trade forecast will come out in early October, “and it will be interesting to see what direction trade has taken since the spring.”

“Globalization never really went away, but in recent years it has been under serious scrutiny — partly due to international overdependence on China’s manufacturing prowess and the disruption in oil and gas trade due to Russia’s invasion of Ukraine,” said Arthur E. Appleton, a partner at Appleton Luff — International Lawyers and adjunct professor at the Johns Hopkins University School of Advanced International Studies.

Because of China’s actions in the South China Sea and its aggressive rhetoric toward Taiwan, Western countries are making efforts to onshore manufacturing and shorten supply chains, he said in an e-mailed reply to questions.

“Hopefully this is a temporary phenomenon. Despite globalization’s retreat, it remains important, particularly for the Philippines which is beginning to benefit from its various comparative advantages and continued integration into global supply chains,” Mr. Appleton said.

“The Philippines needs globalization to continue the development of its goods sector, and its increasingly important service sector. The rule-based trading system which is the backbone of globalization provides security to the Philippine business community and for Philippine economic development,” he added.

Mr. Appleton said it is in the Philippines’ economic interest to continue its integration into global supply chains despite challenges particularly in agriculture.

On the other hand, he said the WTO is stymied by its reliance on the consensus system.

“Getting 164 members to agree on anything is very difficult,” he said. “The WTO is also hampered by the US decision to block appellate body appointments. Without an effective dispute settlement system, it is more difficult to apply the rule of law when international trade disputes arise.”

Mr. Appleton said WTO members are likely to consider additional plurilateral alternatives to avoid blockages caused by the consensus system, and they need to resolve the dispute settlement impasse.

“The WTO is not perfect — far from it,” Ms. Okonjo-Iweala said in the report. “But the case for strengthening the trading system is far stronger than the case for walking away from it.”

She also said WTO members are acting to reinvigorate the organization, adding that today’s complex challenges require more, not less, international cooperation.

WTO members are actively looking at how to update and upgrade the group’s rulebook so that trade can contribute fully to effective responses.

The alternative to rules-based integration is power-based fragmentation and a world of greater uncertainty, increased socioeconomic exclusion and heightened environmental decline, Ms. Okonjo-Iweala said.

This year’s World Trade Report makes the case that “re-globalization” is a far more attractive alternative, she said, adding that policy makers should find it useful in shaping the future of trade “for peace, people and the planet.”

#WTO #warns #global #trade #splitup

Rice crisis in the Philippines sounds a global inflation alarm

Rice crisis in the Philippines sounds a global inflation alarm

SURGING RICE PRICES in the Philippines could be a warning sign for other major importers of the food staple as the fallout from India’s export restrictions continues to reverberate across Asia and West Africa.

Rice inflation in the Southeast Asian nation increased at the fastest pace in almost five years in August, reviving memories of a 2018 shock that led to the end of a two-decade-old limit on imports. The Philippine central bank warned this week that it’s ready to resume monetary tightening if needed, while diplomacy and deals reign elsewhere as other countries rush to secure supply.

“We’re seeing a great deal of uncertainty,” said Shirley Mustafa, an economist at the United Nations’ Food and Agriculture Organization. “Price pressure is being exacerbated by the restrictions.”

India’s restrictions have upended the market and prompted worried nations to secure supply as they try and contain the rising cost of rice, which is a vital part of the diets of billions of people across Asia and Africa. Manila has placed a cap on prices, a measure that’s led to the downfall of a finance official.  

Finance Undersecretary Cielo Magno said she will resign after a Facebook post that appeared to question the recently implemented price cap. The limit was imposed earlier this month after an “alarming” increase in retail costs.

Supply security is at the top of the agenda for many consumers. Philippine President Ferdinand R. Marcos, Jr. and Vietnamese Prime Minister Pham Minh Chinh met on the sidelines of the ASEAN Summit in Jakarta and are planning a five-year deal. Senegal is making diplomatic overtures to India, taking similar steps to other nations including Guinea and Singapore to ensure supply.

Indonesia has agreed to sign a supply agreement with Cambodia for the first time in over a decade. The memorandum of understanding is for as much as 250,000 tons a year, more than double the volume of a similar deal in 2012. Jakarta has already pledged to provide 10 kilograms of the grain each month to millions of poor families during the fourth quarter of this year.

Other nations are taking steps to stem rising costs. Malaysia has implemented a purchase limit and started checks on wholesalers and commercial millers after allegations that local grain was being sold as imported rice at a higher price. Myanmar has also imposed a mandatory system to record volumes of stored rice to control domestic prices and deter speculation.

Some heat came out of the market this week with Asia’s rice benchmark dipping slightly, but prices are still near the highest level since 2008. — Bloomberg

#Rice #crisis #Philippines #sounds #global #inflation #alarm

Nearly all world’s population exposed to global warming over June-Sept – study

Nearly all world’s population exposed to global warming over June-Sept – study

 – Nearly all of the world’s population experienced higher temperatures from June to August as a result of human-induced climate change, according to a peer-reviewed research report published late on Thursday.

The northern hemisphere summer of 2023 has been the hottest since records began, with prolonged heatwaves in North America and southern Europe causing catastrophic wildfires and spikes in mortality rates. July was the hottest month ever recorded, while average August temperatures were also 1.5 Celsius higher than pre-industrial levels.

A study by Climate Central, a US-based research group, looked at temperatures in 180 countries and 22 territories and found that 98% of the world’s population were exposed to higher temperatures made at least twice more likely by carbon dioxide pollution.

“Virtually no one on Earth escaped the influence of global warming during the past three months,” said Andrew Pershing, Climate Central’s vice president for science.

“In every country we could analyse, including the southern hemisphere, where this is the coolest time of year, we saw temperatures that would be difficult – and in some cases nearly impossible – without human-caused climate change,” he said.

Climate Central assesses whether heat events are made more likely as a result of climate change by comparing observed temperatures with those generated by models that remove the influence of greenhouse gas emissions.

It said as many as 6.2 billion people experienced at least one day of average temperatures that were at least five times more likely as a result of climate change, the maximum value in Climate Central’s Climate Shift Index.

The heatwaves in North America and southern Europe would have been impossible without climate change, said Friederike Otto, a climate scientist at the Grantham Institute for Climate Change and the Environment.

“We have looked at isolated heatwaves,” she said. “They have not been made five times more likely. They have been made infinitely more likely because they would not have occurred without climate change.” – Reuters

#worlds #population #exposed #global #warming #JuneSept #study

Meralco’s first ever Giga Summit to bring in global experts on nuclear power

Meralco’s first ever Giga Summit to bring in global experts on nuclear power

Discussions to focus on sustainable energy, energy management, and smart metering

In the continuing pursuit towards a more resilient and sustainable future, the Meralco Power Academy (MPA) is bringing together over 30 local and international power industry experts in the first ever Giga Summit on Sustainable Energy, Energy Efficiency, and Future Grid.

Scheduled to take place from Sept. 11 to 13 at The Fifth at Rockwell in Makati City, Giga Summit aims to foster knowledge exchange among industry leaders, policymakers, and experts from across the globe and become a platform for exchanging insights, shaping power and energy trends, and sharing best practices.

The Sustainable Energy discussions on the first day will revolve around accelerating the transition towards cleaner and more progressive sources of energy that benefit both people and the planet.

This will feature nuclear power experts including Canada-based Filipino nuclear scientist Dr. Francisco “Ike” Dimayuga of Atomic Energy of Canada Limited, Ultra Safe Nuclear Corporation Executive Vice President Roland Backhaus, University of California, Berkeley Director of International Partnerships for College of Engineering Dr. Matthew P. Sherburne, and University of Illinois Urbana-Champaign, Director of Illinois Microreactor R&D Center Dr. Caleb Brooks.

“Giga Summit will serve as an avenue to spark relevant discussions on the role of next generation technologies in our transition towards stable and sustainable energy supply. With the growing interest on nuclear power, our invited experts will shed light on the opportunities and exciting developments in the area of small and micro modular reactors and share experiential learnings that will be relevant as we put forward plans to utilize these technologies,” Meralco Executive Vice President and Chief Operating Officer and MPA Vice Chairman Ronnie L. Aperocho said.

Meralco EVP and CEO and MPA Vice Chairman Ronnie L. Aperocho said that the 3-day Giga Summit will bring in global nuclear experts who will shed light on opportunities andexciting developments in the area of small and micro modular reactors and share experiential learnings that will be relevant as the Philppines puts forward plans to utilize these technologies.

The second day of the summit will cover Energy Efficiency with sessions that will delve into the various ways to optimize energy consumption; while the third day will tackle Future Grid with discussions on fast-tracking the development and integration of advanced metering infrastructure to meet the growing demand for a smarter and more resilient energy infrastructure.

Also joing the summit are distinguished energy industry experts from both the government and private sector including the Department of Energy, Energy Regulatory Commission, Meralco, ASEAN Centre for Energy, Commonwealth Edison Co., Korea Electric Power Corporation, and Plasma Kinetics, among others.

Interested participants may register at or by sending an email to [email protected].


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#Meralcos #Giga #Summit #bring #global #experts #nuclear #power

UN chief Guterres says global finance system fragmenting

UN chief Guterres says global finance system fragmenting

JAKARTA — The world risks a “great fracture” of its economic and financial systems, U.N. Secretary-General António Guterres said on Thursday at a summit with Southeast Asia’s ASEAN bloc, China, the United States and others in Indonesia.

In a wide-ranging speech that touched on geopolitical tension, multilateral development finance and climate change, Mr. Guterres called on world leaders to find peaceful and inclusive solutions to the challenges facing the world.

“There is a real risk of fragmentation — of a great fracture in world economic and financial systems; with diverging strategies on technology and artificial intelligence and conflicting security frameworks,” he said.

He called for a mechanism to provide relief for debt-strapped developing economies, to include payment suspensions, longer lending terms and lower interest rates.

He also voiced support for re-channelling an additional $100 billion of International Monetary Fund’s Special Drawing Rights through multilateral development banks to increase liquidity and support developing economies’ needs.

Rich countries agreed in 2021 to re-channel the unused funds, an international reserve currency, to poor countries.

At a Paris summit in June this year, world leaders backed a push for multilateral development banks like the World Bank to put more capital at risk to boost lending.

World Bank president Ajay Banga outlined a “toolkit” at that summit, including offering a pause in debt repayments, giving countries flexibility to redirect funds for emergency response, providing new types of insurance to help development projects and helping governments build advance-emergency systems.

Mr. Guterres also said he remained “deeply concerned” over the “worsening political, humanitarian, and human rights” situation in Myanmar, a nation besieged by war since a 2021 military coup.

“I reiterate my urgent call on the military authorities of Myanmar to listen to the aspirations of its people, release all political prisoners, and open the door to a return to democratic rule,” he said.

In a statement on Wednesday, ASEAN chair Indonesia said regional leaders expressed “grave concern” over a lack of substantial progress on their five-point peace plan for Myanmar. — Reuters

#chief #Guterres #global #finance #system #fragmenting