THE 19% tariff set by United States President Donald J. Trump on Philippine goods will have a limited impact on the planned dollar bond issuances by local companies, financial research firm CreditSights said.
“We expect the US tariffs to have a limited impact on the Philippine corporate dollar bond issuers,” CreditSights said in a report.
“We maintain our existing recommendations for the Philippine corporates under our coverage. We do not deem the 19% tariff imposition by the US on good imports from the Philippines as material enough, given their very limited export exposure to the US,” it added.
CreditSights said companies such as ACEN Corp., Globe Telecom, Inc., Manila Water Co., Inc., Petron Corp., PLDT, Inc., and SMC Global Power Holdings Corp. are largely focused on the domestic market.
It added that conglomerates Aboitiz Equity Ventures, Inc. and JG Summit Holdings, Inc. have export-heavy food manufacturing businesses primarily across Asia, and not to the US.
“Aboitiz’s animal feed business may face increased competition from higher US feed imports. JG Summit’s snack foods business could see lower wheat input costs from higher wheat imports from the US,” it said.
Ayala Corp. also has minimal export exposure to the US through its semiconductor subsidiary Integrated Micro-Electronics, Inc., which contributes only a small portion of its total revenue, CreditSights said.
The research firm also said that the Ang-led conglomerate San Miguel Corp. faces marginal export exposure to the US that can be offset by its diversified business portfolio.
“We acknowledge SMC could face weakened domestic competitiveness and pricing for its poultry and animal feed units, given the US is a major supplier of chicken, pork, and animal feed to the Philippines. That said, we deem the impact manageable, supported by SMC’s strong domestic brand equity, well-established presence and its diversified business portfolio,” CreditSights said.
Oil refiner Petron, another Ang-led company, might see higher logistics costs as it may be compelled to source crude oil and gas from the US. However, the company enjoys a full market pass-through mechanism to protect its margins.
CreditSights said the domestic ports of the Razon-led International Container Terminal Services, Inc. (ICTSI) could see higher volume with the expected increased imports of US goods into the Philippines.
“ICTSI has limited direct trade exposure to the US. While it could see some throughput weakness at its Mexico port, we take good comfort in ICTSI’s strong global geographical diversification and ability to preserve margins by hiking port fees,” it said.
The local business of fastfood giant Jollibee Foods Corp. also stands to benefit from lower input costs of wheat and poultry due to higher US imports.
Mr. Trump recently announced a 19% tariff on Philippine goods entering the US, a step down from the 20% duty set earlier this month. However, it is higher than the 17% tariff announced by Mr. Trump as part of his Liberation Day tariffs in April. — Revin Mikhael D. Ochave