The yield of the benchmark seven-year treasury bond softened at the auction yesterday, driven down by excess liquidity in the financial system. The bond due March 3, 2013, was reissued at a yield of 8.376 percent, down from its coupon of 8.750 percent when the new benchmark bond was first issued earlier this month. Total tenders for the R8 billion on offer, which was awarded in full, reached R26.795 billion. National Treasurer Omar Cruz said the reissuance of the bond showed the pent-up demand for the benchmark debt. Tenders for the bond’s initial issuance totaled R20 billion, but the treasury only accepted R15 billion. "This is better than forecast," Cruz told reporters after Tuesday’s auction. "Interest (in the bond) has increased tremendously." He said that daily trading volume on the seven-year paper in the secondary market has increased to around R400 million-R500 million from only R100 million previously. Spreads have also narrowed to around 1-1.5 basis point from 25 basis points previously, creating an environment conducive to corporate bond issuance, he said.

Bank of the Philippine Islands revised its net profit last year to P8.4 billion from the P8.1 billion it reported earlier to reflect P300 million in accounting-related adjustments. That would be an increase of 25.4 percent from the P6.7 billion in profit made in 2004 by the country’s second-largest lender. The bank’s return on equity improved to 14.7 percent from 12.5 percent previously, while return on assets rose to 1.8 percent from 1.6 percent. BPI said total revenues rose 24 percent to P28.1 billion on the back of higher net interest and non-interest gains. Operating expenses were up 28 percent as it paid higher documentary stamp tax and settled non-recurring taxes.

The Department of Agriculture said yesterday it expects higher rice and corn output in the first quarter despite unusually high rainfall that caused flooding in some areas. First quarter rice production is likely to increase by 7 percent on year, while corn output should surge 25 percent on year, Agriculture Secretary Domingo Panganiban said in a statement. In the year-earlier quarter, rice production declined 1.5 percent on year to 3.3 million metric tons, while corn output plunged 18 percent on year to 1.25 million tons because of a drought caused by the El Niño weather phenomenon. Panganiban said floods destroyed more than 8,000 hectares of rice crop, which will likely cut output to around 3.62 million tons from an earlier forecast of 3.68 million tons for the first quarter. He said paddy rice yield is expected to decline by 0.85 percent from the earlier forecast of 3.54 tons a hectare, "as frequent rains may result in chaffy and unfilled grains." As for corn, Panganiban said that harvest in 264,000 hectares, or 44 percent, of areas planted to corn has been completed in midFebruary. He said that while floods induced by heavy rains have damaged 13,000 hectares of corn, it will only cause production to fall to around 1.57 million tons from an initial forecast of 1.63 million tons. (Dow Jones)

National Foods Ltd. reported positive sales volumes in the first two months of the year. Overall volume growth was 4.3 percent for the period, with growth rates across all its principal products: Milk, yogurt and juice. Meanwhile, exports, cheese and gourmet foods and other specialty products grew in excess of 30 percent from a lower base. The volume increases on different distribution channels were accounted for my milk sales in route, juice and yogurt in groceries, and bulk cream and cheese sales in new areas. The distribution focus and better coverage is a result of the close coordination and or the combined sales team of National Foods and Berri Ltd. A greater proportion of higher margin products were likewise delivered across different channels, resulting in net sales growth of 6 percent to A8 million year-to-date. EBIT growth for the same period accelerated 9 percent, driven partly by the synergy benefits from the integration. National Foods will be more active in marketing its new and exciting products in milk and juice. A new packaging design will be rolled out for Big M and more below-the-line activities are planned for Farmers Union Iced Coffee. In the juice category, the media campaign of Daily Juice and Australian Fresh is well-received by consumers, opening new opportunities to create excitement in the market.