Bids for 7-day TDF reach ₱231.35 B
RFM net profit dips to ₱212 M in Q1
The central bank’s 7-day term deposit facility (TDF) attracted ₱231.35 billion bids during its auction on Wednesday against offer of ₱100 billion as banks swamped the lone TDF. This week’s volume is higher than May 6’s ₱70 billion offer.
During the auction, the TDF’s average rate increased to 2.3135 percent from the previous auction’s 2.2654 percent.
The shortest-dated TDF is still the only tenor being offered by the Bangko Sentral ng Pilipinas (BSP), sidelining the other two tenors the 14- and 28-day, while on enhanced community quarantine (ECQ) to manage BSP’s liquidity siphoning off tools.
The BSP’s decision to temporarily reduce TDF volume is part of liquidity management measures during the pandemic, said BSP Governor Benjamin E. Diokno.
Diokno said the BSP will ensure there is enough much needed liquidity at this critical time of a health crisis. Too boost the confidence of the local financial market, the BSP has implemented several liquidity-enhancing measures such as the reduction in the policy rate of 125 basis points (bps) and cutting banks’ reserve requirement ratio by 200 bps.
The BSP also reduced the overnight reverse repurchase (RRP) volume to encourage the shift from RRP to the interbank marketor government securities. The BSP is also buying government securities in the secondary market on top of a ₱300 billion repurchase agreement with the Bureau of the Treasury.
In the meantime, Diokno said the BSP is on track with its schedule of launching the BSP bonds in the second semester of 2020. The BSP bonds will complement the TDF as a liquidity management tool.
The BSP has conducted prelaunch activities for the bonds before the ECQ was imposed on March 17 and will resume marketsounding exercises when the lockdown is lifted.
The BSP restored its authority to sell its own bonds last February 14, 2019 when the amendments to the BSP Charter was signed into a new law.
Food and beverage company RFM Corporation reported that preliminary data for the first three months of 2020 indicate net income slowed by 4 percent to ₱212 million even though sales grew 3 percent to ₱3.2 billion.
In a disclosure to the Philippine Stock Exchange, RFM President and CEO Jose Ma. A. Concepcion III said “RFM saw mixed results for its ice cream, milk, pasta and institutional bread and flour units.”
“Prior to the lockdown, we saw strong growth across most units. However, the lockdown affected our ice cream sales, especially in the out-of-home segments as consumers were restricted to their homes,” he noted.
Concepcion added that, “the stay-at-home situation shifted more buying to our Selecta Milk, Royal and Fiesta Pasta and sauces, as well as White King hotcakes, champorado and arroz caldo. Institutional bread and flour sales were hit by closures of fastfood outlets.”
He said “the increased demand for RFM’s packaged pasta and milk also highlighted challenges in production and supply chain as well as in plant safety and health of workers under the ECQ. Our manpower and delivery personnel were limited by the ECQ even as we housed some staff in our sites to ensure steady production of our food products.”
Concepcion said sales and income outlook for the second quarter is expected to be more subdued than 2019. “The limited mobility and spending power of consumers will bear down on the sales of ice cream and institutional sales to fastfood outlets even as milk and pasta will see sustained demand,” he pointed out.
RFM has scaled back capital expenditures and reconfigured expenses to the new normal.
Concepcion pointed that “RFM has paid 30% of its ₱1.2 billion 2019 net income last March, and despite the hit on income, there is still more than enough company liquidity and retained earnings to look forward to the second tranche dividends, albeit at a scaled down magnitude.”