The Money Market Association of the Philippines held its First General Assembly on April 2 at the Grand Ballroom of Intercontinental Manila.

Gracing the event was Deputy Governor Nestor Espenilla. He opened his speech with a favorable statement that thePhilippines currently in a strong position to overcome the crisis.  Bank lending is growing, NPL ratio has been declining and favorable forecasts by foreign institutions reaffirm this view. 

BSP is currently focusing on reforms in the following areas to protect public interest: 

  1. Deputy Governor Espenilla mentioned the need to improve the Philippine benchmarks.  Currently, BSP is looking for modifications or changes in Phiref as a reference rate for swaps as it does not disguish whether rate is caused by implied interest rate from cross currency or our own.
  2. Changing how the yield curved is being determined. On developed markets the basis for yield curve starts from the 10 year and 30 year bonds, which is the most liquid then it moves to the shorter tenors. In the Philippines, however, the 91-day Treasury Bills and a corresponding spread being used to determine the yield curve.  As a result, the Philippine spread differencial between the 10year and 1 year is much wider compared to developed countries.
  3. BSP is committed to bring the rates to positive real interest rates in the long run.

    4. He noted that one of the BSP’s thrusts is to institutionalize bond price wherein it fosters a liquid and transparent market for price discovery and access to investor.  It could be done through the                   development of the REPO market. 

When asked about the proposed changes in the US Mark to market rules, he mentioned that they have been talking with other regulators with regards to the issue and they admit that MTM add volatility in the market.  The crisis that we are in today is a crisis on the confidence on the financial institutions and the MTM would just make it worse.  It was the reason why there were swift to allow banks to change their asset classification in November 2008 which saved banks approximately P40BB in capital.  MTM changes would only be temporary a relief.  BSP will look at it in a pragmatic way and is open to it but advised the market not to count on it. 

Within 6 months, BSP will look at an exit strategy for temporary concessions such as FCDU asset cover extension. 

There was also a question on the world reserve currency, the Deputy Governor believes that the statement is more of a political statement from China and the USD will remain the world reserve currency. 

During the program, the newly-elected Directors for the year 2009 were inducted with their corresponding Committee responsibility: 

Operations – Kit Agena (MBTC)

Professional Markets – Joan Policarpio (DB)

Public Distribution – Roland Avante (Chinatrust)

External Affairs – Jojo Dispo (FMIC)

Membership – Joric Nazario (PVB) / Alex Macapagal (LBP)

Education – Ricky Cebrero (EWBC) / Paul Evora (BDO)

Website – Lester Castolo (MIB)

Legal & Audit – Mon Lim (PNB)

Fellowship & Sports – Toto Hilado (RCBC) / Jojo Velasquez (PSBank)

Convention – Lulu Cinco (AB Capital) / Jojo Velasquez (PS Bank) 

Four (4) new associate members were inducted also with their respective representatives: 

Philippine Health Insurance Corporation – Val S. Valila / Evangeline F. Racelis 

Producers Rural Banking Corporation – Edmundo C. Medrano / Josie S. Monegas 

Tradition Financial Services Phils., Inc. – Lourdes D. Consing / Victorio M. Gomez, Jr.           

Vicsal Investment, Inc. – Francis E. Jose / Raymund R. Abara