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CORPORATE Philippines now obtains its funding
requirements from the domestic capital market rather
than abroad, the recorded mix being 70 percent local
funds, according to the Bangko Sentral ng Pilipinas (BSP).
BSP
Governor Amando Tetangco Jr. said the shift was made
possible by significantly stronger macroeconomic
underpinnings driven by a number of policy and
structural reforms.
The
preferential shift effectively shields the economy from
the turmoil in foreign markets recently precipitated by
the unraveling of the subprime lending market in the
US,
according to Tetangco. “There has been a shift by large
companies whose funding ratios now stand at 70 percent
local, or a reversal from practices in the past,” he
said.
Tetangco
brushed aside fears of a contagion where local lenders
may also limit credit access to only the higher-rated
borrowers, and none for the more risky set composed of
ordinary Filipinos. “We still have sufficient liquidity
in the system. I do not expect this to be a source of
[credit] pressure.”
The loan
markets in the US, Europe, Japan, Canada and Australia
have been hit by lenders’ reluctance to extend credit,
forcing central banks to inject liquidity totaling more
than $326 billion thus far.
Bank
lending to the productive sectors of the Philippine
economy in fact grew by 6.7 percent to P1.77 trillion in
May, from P1.76 a month earlier.
“With
improvements in the domestic capital markets, we should
be less dependent on foreign funding,” said Tetangco,
adding that the local banks’ exposure to the
collateralized debt obligations of foreign financial
entities was “not significant.”
“The
fallout to us will only be indirect, largely in the form
of risk aversion to emerging markets in general,” he
said. |
