OFW bonds sale shelved

OFW bonds sale shelved

AS INTEREST RATES PLUNGE TO NEW LOWS, POOR RECEPTION SEEN

By Jun Vallecera

Reporter

WELL, you can’t win all the wars all the time, Treasury chief Omar Cruz said on Monday as domestic interest rates plunged to their lowest on record. He told reporters that as local interest rates moved down, and indications are this will remain down for some time going forward, the plan to issue a bond exclusively for overseas Filipino workers had to be abandoned. “I thought everyone forgot about it already. That has been temporarily shelved,” Cruz said of the multibillion- peso OFW bond sale whose proceeds were supposed to underwrite the country’s ambitious infrastructure buildup program. He said with interest rates plunging to new lows, no one was going to be interested in a bond sale that was not going to pay as much yield as most other recent bond sales had been to patrons. “Where the rates are at present . . .” Cruz said, his voice trailing off. According to him, the last time the Treasury went to market with retail Treasury bonds in hand, the reception was not very warm. He said timing the sale was of utmost importance and that “definitely the time is not now.” Cruz put an end to the OFW bond sale even as the Bangko Sentral ng Pilipinas continues to find ways to encourage millions of OFWs to allocate a portion of their foreign exchange earnings in the planned sale. The putative come-ons include preferential loan treatment for OFWs and zero-maintaining balances on their deposits, among others. Depositors are required at present to keep a minimum amount of deposits, otherwise the account is charged a monthly fee, effectively punishing the depositor. Chinatrust Bank president Joey Bermudez said the low interest rate regime that Treasury chief Cruz cited as basis for canceling the OFW bond sale works to the advantage of banks, in general. But he ruled out an immediate impact on higher lending on this basis, saying borrowers do not flock to the nearest bank right away. “There is a lag, as most borrowers would want to wait a while, trying to see if the rates would fall some more,” Bermudez said. He also said while low interest rate regimes encourage consumers to take more car loans and housing mortgages than usual, credit-card receivables do not necessarily go up as well. “That only happens if there is a price war, where one competitor lowers his rate, forcing the others to follow,” Bermudez said.  http://www.businessmirror.com.ph/02202007/headlines01.html