FMIC eyes P150 B in bond issues for 2011

MANILA, Philippines - The First Metro Investment Corp. (FMIC) is expected to contribute to another sterling performance of the country’s capital markets this year, as it gears up for foreign and locally-denominated bond or debt issues worth over P150 billion.

“It will involve the private sector in the fields of energy, banking and finance, infrastructure and government-initiated such as retail treasury bonds (RTBs),” Roberto Juanchito T. Dispo, FMIC executive vice president, said.

The FMIC executive said that the “usual suspects” would still dominate the market, including the major conglomerates, the Power Sector Assets Liabilities and Management Corp. (PSALM) and the National Power Corp. (Napocor), and groups that will be involved in the Public-Private Partnership (PPP) in the infrastructure sector, financial institutions that will still have to raise fresh capital in accordance with the Basel III framework.

Dispo said that FMIC is working with government to offer RTBs in the next two years with tranches of P50 billion per year. “We will also be enticing government owned and controlled corporations (GOCCs) to gap the bond market for their funding needs,” he added.

FMIC forecasts that the capital markets will experience strong performances.

“Inflation will remain tame, investors will still be in search of yields. An anticipated lower deficit level will lead to lower borrowing by Republic, which in turn will result in relatively weak impact of interest rate even if it will likely be raised by 25 basis points,” FMIC officials said. “The upgraded credit ratings made by Moody’s and Standard & Poor will outshine the minimal increase in interest rates.”

The country’s capital markets already recorded a banner year in 2010. The issues got bigger or as high as P18 billion with tenors are getting longer to up to 25 years.

Corporate issues amounted to P470 billion last year while the government sector relied more on the domestic market or 80 percent of total borrowing to raise funds last year.

Of the total government borrowings, FMIC was involved in nearly 80 percent of all issues.

“In 2011, we will continue our dominance. It is a promising year with strong macroeconomic indicators,” Dispo said in a press briefing yesterday.

Meanwhile, FMIC is forecasting that the gross domestic product (GDP) in 2011 will expand by another 6.7 to seven percent and gross national product (GNP) growing by another eight to nine percent.

Remittances inflows will keep their beneficiaries happy will an estimated eight percent growth or roughly as strong as 2010.

The market value of the 31-major index firms in the Philippine Stock Exchange (PSE) is seen to hit P4.4 trillion. The average earnings of al the listed companies will expand by at least 11 percent.

The price to earnings ratio (P/E) will grow 16 times.

The PSE index will grow to as high as 5,000 although it will close in the vicinity of 4.800.

The peso will remain strong in 2011 ranging from P42-46 versus the US dollar. Meanwhile, exports is seen to gain strength, especially the electronics sector, to 13 to 15 percent while imports 18-20 percent.

In contrast, inflation will remain inutile at 3.5 percent and interest rates at another low of three percent. World oil prices will remain in the $100 per barrel range.