ADB triples COVID-19 aid package to $20 Billion

MANILA — The Asian Development Bank on Monday announced that it is tripling the size of its response to the COVID-19 pandemic to $20 billion.

The ADB said the package will be available to member countries so that they can counter COVID-19's impact on health and the economy.

The multilateral lender said it is also streamlining its operations for quicker and more flexible delivery of assistance.

“Our expanded and comprehensive package of assistance, made possible with the strong support of our Board, will be delivered more quickly, flexibly, and forcefully to the governments and the private sector in our developing member countries to help them address the urgent challenges in tackling the pandemic and economic downturn,” said ADB President Masatsugu Asakawa. 

The private sector will be able to tap $2 billion from the $20 billion package, ADB said.

ADB’s most recent assessment, released on April 3, forecasts regional growth to decline to 2.2 percent this year from 5.2 percent last year because of the effects of the pandemic.

source: news.abs-cbn.com

ADB warns global cost of virus could top $4 trillion

MANILA - The coronavirus pandemic could cost the global economy $4.1 trillion as it ravages United States, Europe and other major economies, the Asian Development Bank warned on Friday

The estimated impact is equivalent to nearly 5 percent of worldwide output based on a range of scenarios, but the lender said losses from "the worst pandemic in a century" could be higher. 

"The estimated impact could be an underestimate, as additional channels such as...possible social and financial crises, and long-term effects on health care and education are excluded from the analysis," the ADB said.

The Manila-based bank said a shorter containment period could pare the losses to $2 trillion.

The crisis has sent equity markets spinning as traders fret over the long-term impact on the world economy, though governments and central banks have stepped in to ease the pain, pledging more than $5 trillion in stimulus and easing monetary policy.

Officially reported COVID-19 cases worldwide topped the 1 million mark on Thursday, with tens of thousands dead, while there are warnings the numbers will continue to balloon as the disease rapidly spreads. 

With billions of people in lockdown and economies at a standstill, the ADB said Asia is forecast to grow 2.2 percent this year, its slowest pace since a 1.7 percent expansion during the Asian financial crisis in 1998. 

"No one can say how widely the COVID-19 pandemic may spread, and containment may take longer than currently projected," ADB chief economist Yasuyuki Sawada said. 

"The possibility of severe financial turmoil and financial crises cannot be discounted," he added. 

The forecasts assume the coronavirus outbreak will be contained this year and a return to normality in 2021. 

However, there is still the potential for additional outbreaks and the severity of the pandemic remains uncertain. 

"Outcomes can be worse than forecast and growth may not recover as quickly," the bank said. 

Growth in China, the region's largest economy, could slow to 2.3 percent this year from 6.1 percent in 2019, before bouncing back in 2021. 

"The outbreak became a demand shock as people stayed home. It became a supply shock as companies suffered shortages of labor...and of materials as supply chains faltered," ADB said.

Close to 5 percent, or $628 billion, of China's GDP could be lost. 

Agence France-Presse

ADB sees 'significant' coronavirus impact on Developing Asia

MANILA – The coronavirus outbreak could have a "significant" impact on Developing Asia, as it slows travel, tourism, consumption and supply chains, the Asian Development Bank said Friday.

The global economy could lose up to $347 billion in a worse case and $156 billion in a moderate case and $77 billion under the best scenario, the Manila-based lender said.

Loses under a moderate case, where travel bans start easing in 3 months, could account for 0.2 percent of global gross domestic product, the ADB said.

China, where the virus originated, could account for $103 billion of losses under the moderate scenario, while the rest of Developing Asia could lose $22 billion.

"We hope this analysis can support governments as they prepare clear and decisive responses to mitigate the human and economic impacts of this outbreak," said ADB chief economist Yasuyuki Sawada.

President Rodrigo Duterte's economic team "will recommend appropriate measures in due time" to counter the economic fallout from the outbreak, Budget Secretary Wendel Avisado earlier said. 

Bangko Sentral ng Pilipinas Governor Benjamin Diokno also signaled deeper cuts to the benchmark interest rate of up to 75 basis points this year, instead of 50. 

The ADB has announced millions in aid to enhance detection, prevention and response to the global outbreak that has infected over 93,000. 

- with a report from Reuters

source: news.abs-cbn.com

China, Japan, S. Korea to jointly combat financial instability

TOKYO - East Asia's three biggest economies vowed Friday to work together to help prevent market instability as tensions run high over Pyongyang's weapons programs.

North Korea's efforts to develop an arsenal of nuclear-armed missiles have fueled concerns among its Asian neighbors and led to threats of military action from Washington, as well as calls for China to rein in its reclusive ally.

Financial markets have been rattled by the events which have hit investor sentiment, and on Friday finance ministers and central bank governors from China, Japan and South Korea affirmed their cooperation in the face of future uncertainty.

"We will continue high degree of communication and coordination among China, Japan and Korea to cope with possible financial instability in the context of increased uncertainty of global economy and geopolitical tensions," a joint statement said.

The three-way talks were held on the sidelines of the Asian Development Bank's annual meeting in Yokohama, southwest of Tokyo.

Financial ministers and central bank governors of the 10-strong Association of Southeast Asian Nations (ASEAN) were also attending the ADB gathering, which began on Thursday.

In a separate meeting with ASEAN countries, Japan on Friday proposed to create a new currency swap arrangement worth 4 trillion yen ($36 billion) in case the region faces a financial crisis.

A swap is a useful device in times of economic stress, when normal foreign exchange markets can seize up.

"The yen is a stable currency and can work effectively for the stability of financial markets," Japanese Finance Minister Taro Aso told reporters, according to public broadcaster NHK.

Participants responded positively to the proposal, NHK said.

Since the onset of the Asian currency crisis in the late 1990s, Japan has spearheaded efforts to build a multilateral currency swap agreement.

source: news.abs-cbn.com

Obama gets special souvenir from ADB in Manila

MANILA, Philippines - US President Barack Obama got a special souvenir from the Asian Development Bank, during his state visit to the Philippines.

US Executive Director to the ADB Ambassador Robert M. Orr gave Obama a book containing his mother's writings for the ADB, during a meeting on Monday.

Dr. Ann Dunham had worked as a consultant for ADB on two projects —the Agricultural Development Bank of Pakistan’s Gujranwalla Agricultural Development Program in 1987-1988 and a technical assistance for the Institutional Strengthening of the State Ministry for the Role of Women in Indonesia in 1994, financed by the Japan Special Fund.

"The Collected Works of Dr. Ann Dunham for the Asian Development Bank" was taken from the archives correspondence, signed documents, reports, and presentations related to the two projects.

"Dr. Dunham devoted much of her working life to helping the people of Asia, including Bangladesh, India, Indonesia, Nepal, Pakistan and Thailand... She was a pioneer in the field of micro-credit—work that is still considered key to reducing poverty in many areas. We are happy today to be able to commemorate her association with ADB," Orr said.

Dunham was born in 1942 in Kansas and educated at the East-West Center, University of Hawaii, where she met President Obama’s father, and the University of Washington,

She also worked for the Ford Foundation in Jakarta and Women’s World Banking, establishing micro-credit loans for the poor.

Unfortunately, she was unable to finish her work in Indonesia for ADB, since she fell ill around this time with the cancer that she was to succumb to in 1995.

source: www.abs-cbnnews.com

PH bond market grows 12 pct in Q2 - ADB

MANILA, Philippines - The country's local currency bond market grew by 12.1% in the second quarter on the back of higher borrowings by the national government, according to an Asian Development Bank report.

In a report, ADB said the local currency bond market hit P4.086 trillion in the second quarter from P3.646 trillion a year ago.

Most of the bonds outstanding were government securities, totaling P3.545 trillion. Corporate bonds totaled P541 billion.

In the second quarter, outstanding fixed-income instruments issued by the government and state-owned firms rose 12.5%, as Treasury bonds jumped 15.7%.

In the April to June period, the government sold P90.9 billion of short-term debt papers, while domestic investors bought P30 billion of Treasury bonds.

On the other hand, fixed income bonds issued by government owned-and -controlled corporations fell 8.5% in the second quarter to P113.5 billion.

The local corporate bond market jumped 9.3% to P541 billion in the second quarter from P495 billion in the same period last year.

During the period, Energy Development Corp. was the sole issuer of corporate notes, raising P14 billion worth of 7- and 10-year bonds.

The ADB noted only 51 companies were actively tapping the domestic capital market, with 31 issuers accounting for 92.2% of the total outstanding corporate bonds at end-June.

Most were publicly listed with the Philippine Stock Exchange, and only 5 were private companies.

As of end-June, San Miguel Brewery was the largest firm issuer in the country with P45.2 billion of outstanding debt. Ayala Corp. followed with P40 billion and Banco de Oro Unibank with P38 billion.

Other top corporate issuers were SM Investments (P36.1 billion), Ayala Land (P31.2 billion), Energy Development (P26 billion), Philippine National Bank (P21.9 billion), Manila Electric (P19.4 billion) and Philippine Long Distance Telephone (P17.3 billion).

source: www.abs-cbnnews.com

Meet James Yap's Italian girlfriend

Couple makes first public appearance together

MANILA -- James Yap and his girlfriend of over a year, Michela Cazzola, made their first public appearance together at a party attended by local entertainment personalities Saturday.

The 31-year-old star cager was accompanied by Cazzola at the birthday celebration of talent manager Arnold Vegafria, who is also Yap's business agent.

Although Yap had only started hinting at his romantic relationship in June through photos on Instagram, ABS-CBN News has learned that he and the Italian national have been a couple for more than a year now.

Cazzola is a secretariat specialist at the Asian Development Bank in the Philippines. She is no stranger to the country, as her father also worked here for a time.

Early this month, Cazzola met Yap's family when the basketball player's father celebrated his birthday.

Yap's going public with his relationship with Cazzola comes after a series of controversies involving him and his former wife, actress-host Kris Aquino, and their only child, James "Bimby" Yap, Jr.

Aquino and Yap were married in civil rites in July 2005. Their marriage was declared null in February last year, following allegations of infidelity on Yap's part.

The father no longer has custody of Bimby, but was recently allowed to resume visiting his son after a Makati court denied Aquino's appeal for a permanent protection order against him and a subsequent "compromise" between the former couple.

While Yap appears ready to introduce Cazzola to local showbiz, the San Mig Coffee player has said this isn't the case when it comes to his son.

Asked in an earlier interview whether he wants to introduce Cazzola to Bimby, Yap said, "Wag ko muna isipin 'yun. Ang iniisip ko muna kung paano ko ibo-bonding 'yung anak ko. 'Di ko pa iniisip kung ipapakilala ko siya." -- Report from Mario Dumaual, ABS-CBN News

source: www.abs-cbnnews.com

PH sticks to debt plan despite ratings upgrade

NOIDA, India (IFR) - The Philippines will focus on the onshore market for its funding needs in 2013 rather than offshore even after the country sealed full investment-grade status with its second credit rating upgrade, Treasurer Rosalia de Leon said.

The upgrade opens the door to fresh foreign capital because the Philippines is now eligible to be part of indices used to benchmark tens of trillions of dollars in investments.

But in an exclusive interview with IFR, the treasurer said the new status would not sway the government's approach to using local markets for most of its P700 billion (US$17 billion) in sovereign funding needs.

"For 2013, all our funding will be coming from onshore," she said on the sidelines of an Asian Development Bank meeting in India.

Even if the Philippines does consider new offshore issuance to fund a buyback as part of managing its debt liabilities, the goal will still be to issue debt to foreign investors only in peso, the local currency, she said.

"We have skipped the opening curtain this year, and because of the liquid tone of the market, we continue to finance in the local market," she told IFR.

Her remarks came shortly after Standard & Poor's upgraded the Republic of the Philippines (RoPs) to BBB- from BB+, news that sparked a sharp rally across the yield curve.

S&P's move follows Fitch's upgrade of the Philippines in March to BBB-, giving the sovereign two investment-grade (IG) ratings.

It now qualifies to be part of the Barclays US Investment Grade and Global Aggregate and Asia Pacific IG Aggregate indices, as well as others from Citigroup and JP Morgan.

Funds that benchmark against them would have to buy Philippines sovereign debt (if they do not already own it) to reflect the underlying composition, but it is not clear what weighting the country might have in the key indices.

"Given the two upgrades, the Philippines can also be included in the global index," the treasurer said. "In terms of the demand for RoPs, there will be more interest - and it also give us a lot of interest from crossover investors who are not (only) investing in IG."

But she said there was no reason to change course from a policy of replacing shorter-term high-coupon debt with lower-yielding longer-term bonds, which has helped the Philippines secure full IG status.

The upgrade boosted prices of the sovereign's bonds in the secondary market. Outstanding 2030s, 2032s and 2034s jumped about US$1.50 to be quoted on Friday at 173.00/173.50, 137.15/137.65 and 141.50/141.75 respectively.

The higher prices mean yields on Philippine bonds, which were already among the lowest for sub-investment grade sovereigns in the world, will drop further.

EXPENSIVE TO BUY

The rise in Philippines bond prices as the country developed IG status meant that it became more expensive for the sovereign to buy back its own debt.

For example, the outstanding 2030s have a coupon of 9.5% but currently offer a yield of 3.62%. To buy them back ahead of their call date, the sovereign would have to pay the market price of 173.25.

The sovereign carried out an exercise in November to manage its liabilities, buying back US$1.5 billion in high-coupon bonds using treasury funds and the proceeds of a US$750 million-equivalent offshore peso bond. It is not clear how the Philippines could undertake a similar operation in the current climate.

"Prices right now, they have hit the roof," de Leon said. "So we have to see if we can do that exercise we did last year."

But even if there is new issuance in the offshore market to fund a buyback, De Leon stressed that the goal is to continue to issue debt to foreign investors in the local currency only, the country's policy of the past few years.

"If ever we go back to the market, the global peso note is one structure we will continue," she said.

Meanwhile, local investors may be the only ones to get a chance at dollar-denominated sovereign paper.

De Leon suggested that the Philippines may reopen its US$500 million bonds due in 2023, which were issued in November last year to local investors only, or it may create a new local dollar benchmark.

Last year's bonds were issued to control the appreciation of the peso. Philippine banks tend to have very high dollar liquidity - due to the high level of remittances from Philippine nationals working abroad - so the creation of local sovereign dollar bonds has helped drain off excess hard currency.

"We continue to see a problem of capital surges," de Leon said, suggesting that was a key reason why 90%-95% of the P700 billion (US$17 billion) of the sovereign's funding needs will be raised in the local market.

She said the Philippines this year also planned to issue inflation-linked bonds - an instrument now absent in the sovereign's debt portfolio - aiming at the "sweet spot" of 10-year maturities.

But de Leon noted there were still some hurdles to such issuance. "There are some regulatory approvals we want to secure," the treasurer said. "And (we need to) educate investors."

source: www.abs-cbnnews.com

ADB commits $1.87 billion to PH for next 3 years

The Asian Development Bank has pledged $1.87 billion to the Aquino administration for the next three years, according to the National Economic and Development Authority.

Under its Country Operations Business Plan 2013 to 2015, the Manila-based lender will break down the assistance as follows:

- $600 million for 2013;

- $700 million for 2014; and

- $570 million for 2015.

The lending program covers projects in the following areas:

- Public sector management, $750-million;

- Multi-sector, including disaster risk financing and social protection projects, $470 million;

- Education, $300 million; and

- Transportation, $200 million.

“We are glad the ADB lending program responds to our needs and priorities as laid out in our Philippine Development Plan for 2011 to 2016,” Rolando Tungpalan, NEDA deputy director-general said.

The program also involves a $325-million co-financing facility from the Association of Southeast Asian Nations Infrastructure Fund that was launched during the ADB’s 45th Annual Governors’ Meeting in Manila. The fund will support projects on water supply, transportation, and road improvements for three years.

source: interaksyon.com