More firms to tap capital markets

MANILA, Philippines - The country’s top corporations are still expected to tap the local and foreign capital markets, despite having already “amassed considerable funds,” a global investment banker said.”

In a briefing, Citi managing director and head of global banking Kristine Braden said leading companies have accumulated substantial “war chests” but will still be moving forward.

“Offshore expansion will be ongoing as there are continued organic activities as well as potential mergers and acquisitions (M&A). Majority of the hedging has already occurred,” Braden added.

She said banks either are also active in raising capital for short- to long-term purposes, in peso, dollars, or hybrid securities and senior debts.

Citi officials said the peso capital markets will continue to expand. In fact, Philippine corporates get better rates over those issued by other issuers/nationalities, which normally have been getting better ratings.

However, Citi country officer for the Philippines Sanjiv Vohra warned that markets will remain choppy, cautioning corporates and banks to be prepared and be ready.

“There is an appetite for good corporate opportunities, but it will get narrower,” Vohra said.

Citi is optimistic nonetheless that 2011 will be better for the Philippines than 2010 although a lot depends on external conditions.

“The challenge is the external conditions, like the preference in the emerging market risks over the economic or macro events of the developed markets,” the Citi country chief said.

Citi operates in three pillars or sectors including consumer banking, global banking and global transaction services. Each contribute roughly a third of earnings.

Last year, it helped the Philippine government and corporates raise close to $3 billion from the international capital markets.