PDEx placements reach P188.8B

MANILA, Philippines - The listing of the P3-billion worth of three-years, and five-years fixed rate bonds issued by Aboitiz Power Corp. recently brings overall tradable corporate debt level to over P188.8 billion with the Philippine Dealing and Exchange Corp. (PDEx).

The PDEx is the country’s only fixed income exchange and a critical component of the Philippine capital markets. It is a member of the Philippine Dealing System Holdings Corp., (PDS Group), which includes the Philippine Depository and Trust Corp. and the Philippine Securities and Settlement Corp.

PDS Group president Vicente B. Castillo said that Aboitiz Power listing was the second this year after the United Coconut Planters Bank (UCPB). The commercial bank listed a P4.5-billion long-term negotiated certificates of time deposit (LTNCD), which was originally slated for P3 billion but was over subscribed.

The UCPB LTNCD brings the total listed bank debt volume to P39 billion.

“But it is the first listing of a major corporation based outside of Metro Manila based entity, a critical development for the country’s capital markets,” Castillo stressed. Aboitiz Power is based in Cebu City, and a member of the Aboitiz Equity Ventures Inc. (AEV).

Recently, the PDS Group opened an “academy” where brokers and interested parties receive training on fixed income trading and capital markets in general.

“We would like to make sure that our members and brokers speak the same language. Then we would like to bring the academy to schools,” the PDS chief executive said.

The group also hopes to complete the platform wherein the investing public may have access to the fixed income exchange and the capital markets.

PDEx provides the secondary market for both government and private securities, and also operates the country’s foreign-exchange trading platform.

Officials said that the country’s electronic fixed income exchange created a unified, transparent and central community where liquidity could be accessed.

“We created an infrastructure, a trading platform, and a settlement highway. In fact, we are rated by the Bangko Sentral ng Pilipinas (BSP) as Camels 4, the highest given to any bank or banking related institution,” Castillo said.

PDEx has been involved in 27 bond issues since it was formed in 2005.

The historical transaction in March 2005 involved then Equitable PCI Bank making an offer of foreign exchange treasury note (FXTN) with a 14-percent coupon rate and a maturity of 1.15 years (roughly 421 days). BPI Capital Corp. and the Banco de Oro Universal Bank (BdO) made a transaction of P50 million each at 8.975-percent interest rate.

The issue of capital, or access to capital, has been a nagging issue as the global economy continues its road to recovery after the 2008 crash.

According to World Economic Forum research, credit supply must rise by more than $100 trillion in the next 10 years –double its current levels –9 to meet demand for new funding worldwide.

Standard & Poor’s (S&P) estimates that public and private sector borrowers worldwide will need to raise or refinance around $70 trillion of bonds between now and the end of 2015.

In the developed world, much of this total will be accounted for by sovereign issuers, but a large slice will be required by firms looking to finance growth and replace loans, bonds and structured securities issued at low cost before the crisis that are now maturing.

Asia alone will face the challenge of meeting high credit demand growth of $40 trillion.