BSP increases borrowing rate by 50 bps to 14-year high of 5.5%

THE share price of Villar family’s Prime Island Power REIT Corp. rose 6.7 percent on its debut in the stock market, bucking the market’s downward movement.

PREIT opened at P1.47 and hit an intra-day low of P1.37 before closing at P1.60. It is the first company to be listed under Prime Asset Ventures Inc., the holding company of Manuel Paola Villar, the eldest son of real estate tycoon Manuel Villar.

“For PAVI, this occasion is a significant milestone and represents the first step towards realizing our commitment to pursuing critical community infrastructure initiatives that would not only provide our shareholders and investors meaningful and reliable returns but also the opportunity to contribute to capacity building for our country,” Villar said during the listing ceremony Thursday.

Villar said the group planned to expand its portfolio to include assets that would be utilized for clean, sustainable and renewable power generation to address the country’s emerging power requirements.

PREIT’s initial portfolio of land and power plant assets are situated in the island province of Siquijor and the Camotes Group of Islands.

THE Securities and Exchange Commission on Thursday approved Alsons Consolidated Resources Inc.’s issuance of P1.135-billion commercial paper to raise funds for working capital and other short-term expenses.

Alsons said in a disclosure to the stock exchange the amount represents the first tranche of its P3 billion commercial paper program. Its board approved on Aug. 25, 2022 the issuance of new shortterm commercial paper worth P3 billion.

The board also authorized the engagement of MIB Capital Corp. as financial advisor, SB Capital Investment Corp. as underwriter and issue manager, Acuna & Francisco Law as transaction counsel, AB Capital and Investment Corp.-Trust Investment Division as facility agency and the Philippine Depository & Trust Corp. as registrar and paying agent.

The board authorized Alsons to apply for registration and licensing of the commercial paper with the SEC and listing with the Philippine Dealing and Exchange Corp.

THE Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas, raised the overnight borrowing rate on Thursday by 50 basis points to a more than 14-year high of 5.5 percent to prevent the second-round effects of inflation that may accelerate further this month.

BSP Governor Felipe Medalla, who is also the board chairman, said in an online briefing the rate hike would take effect Friday.

BSP Deputy Governor Francisco Dakila Jr. said the last time the policy rate hit 5.5 percent was in December 2008 during the global financial crisis. In November 2008, the policy rate reached 6 percent.

The MB also raised the interest rates on the overnight deposit and lending facilities to 5.0 percent and 6.0 percent, respectively.

“The BSP’s latest baseline forecasts show that average inflation is still projected to breach the upper end of the 2-percent to 4-percent target range for 2022 and 2023 at 5.8 percent and 4.5 percent, respectively,” Medalla said.

He said the inflation forecast for 2024 was adjusted to 2.8 percent owing to the further easing in oil prices, peso appreciation and the slightly lower domestic growth outlook, resulting in part from the BSP’s cumulative policy rate adjustments.

“The Monetary Board arrived at its decision after noting the further uptick in headline and the sharp rise in core inflation in November amid pent-up demand. Moreover, upside risks continue to dominate the inflation outlook up to 2023 while remaining broadly balanced in 2024,” Medalla said.

He said the expected upside risks to inflation over the policy horizon stemmed mainly from elevated international food prices due to high fertilizer prices and supply chain constraints.

He said that on the domestic front, trade restrictions, increased prices of fruits and vegetables due to weather disturbances, higher sugar prices, pending petitions for transport fare hikes and potential wage adjustments in 2023 could push inflation upwards. Meanwhile, the impact of a weaker-than-expected global economic recovery was the primary downside risk to the outlook.

“Amid broad-based inflation pressures, persistent upside risks to inflation and elevated inflation expectations, the Monetary Board deems it necessary to take aggressive monetary action to bring headline inflation back to within target as soon as possible. At the same time, an adjustment in the policy interest rate will continue to provide a cushion against external spillovers amid tighter global financial conditions,” Medalla said.