THE filing of SM Prime Holdings, Inc.’s real estate investment trust (REIT) could be pushed back from its original third-quarter schedule due to a bleak demand outlook.
BDO Capital President Eduardo V. Francisco said the low demand could be due to higher rates amid a still hawkish US Federal Reserve.
The Fed could hike rates again after a break last month, Fed Chair Jerome H. Powell said last week, as stronger-than-expected economic data show the need for further tightening. He also said consecutive increases are on the table.
The US central bank last month paused its tightening cycle after hiking rates for 10 straight meetings by a total of 500 basis points (bps) to a range between 5% and 5.25%. The Fed’s next two meetings will be held on July 25-26 and Sept. 19-20.
Mr. Francisco said the Bangko Sentral ng Pilipinas (BSP) has no choice but to follow the Fed’s move despite cooling inflation.
The BSP last month kept borrowing costs unchanged for a second straight meeting. It raised benchmark rates by 425 bps from May 2022 to March 2023, bringing the policy rate to a near 16-year high of 6.25%. Its next review is on Aug. 17.
Meanwhile, headline inflation eased to 5.4% in June from the 6.2% seen the prior month and in June 2022.
Last month’s print was below the 5.5% median in a BusinessWorld poll conducted last week and fell within the 5.3% to 6.1% estimate given by the BSP.
Mr. Francisco also said that banks are siphoning off demand from the bond market due to the higher rates seen in time deposits. He noted that they have been ready to file the SM REIT, but are hesitant due to no clear market demand.
BDO Capital’s parent BDO Unibank, Inc.’s shares closed at P137.60 a pieced on Wednesday, down by 10 centavos or 0.07%. — Aaron Michael C. Sy
