ONE MORE TIME, FOR THE nth TIME
By Jonathan M. Hicap Reporter
Original report at the Manila Times
The Manila International Airport Authority (MIAA) will hold a soft opening of the mothballed Ninoy Aquino International Airport Terminal 3 in February 2008, as repair work progresses based on the new agreement between the agency and the Japanese contractor.
Robert Uy, MIAA executive assistant, said the new schedule is consistent with the work schedule of Takenaka Corp., which recently agreed to repair the structural defects of the building it constructed, including the 130-square-meter ceiling that collapsed last year.
After the soft opening, the NAIA 3 will be partially operational by the first quarter of 2008. The full opening will then during the first half, Uy said.
NAIA 3 is designed to handle 13 million passengers a year.
The new schedule comes on the heel of a landmark decision by the World Bank’s International Center for Settlement of Investment Disputes (ICSID) dismissing the complaint filed by German airport operator Fraport AG against the Philippine government for its expropriation of NAIA 3.
Fraport filed the case in September 2003 with the ICSID in an effort to recover its investments amounting to $425 million. It is a major shareholder of the Philippine International Air Terminals Co. Inc. (Piatco), which bid for and won the right build NAIA 3 under a build-operate-transfer scheme.
MIAA General Manager Alfonso Cusi said the arbitration body declared that the Philippines did not violate any international trade treaty, rendering itself without jurisdiction over the dispute.
The Supreme Court nullified Piatco’s concession agreement after ruling that it had committed numerous violations.
“With this big victory, we assure local and international investors that those who wish to partner with the MIAA in the operation and economic activities related to NAIA 3, as well as with NAIA 1 and 2, and the Diosdado Macapagal International Airport, will get full protection of the law regarding their investments,” Cusi said.
Fraport, however, is not letting go its claim. It posted a statement on its website, saying the decision “requires in-depth legal examination” which it intends to do.
“Subsequently, Fraport will then be able to decide on its further course of action,” it said.
The expropriation case on the NAIA 3 property is still pending with Branch 117 of the Pasay City Regional Trial Court.
Last year the Philippine government paid P3 billion to Piatco as initial compensation for the NAIA 3. Of the amount, Fraport received $29 million. It owns 30 percent of Piatco.
Uy said the ICSID ruling had a positive impact on the ongoing negotiation between Takenaka and MIAA on the repair of the NAIA 3.
Officials of the two parties are now negotiating on four aspects: structural integrity, testing and commissioning, construction work agreement and oversight committee composition and powers.
Saturday, 25 August 2007
ONE MORE TIME, FOR THE nth TIME
Bangko Sentral ng Pilipinas
Full report here: http://www.bsp.gov.ph/downloads/Publications/2007/BES_3qtr2007.pdf
The overall business confidence index (CI) for the current quarter remained at the 40.0 percent mark for the fourth consecutive quarter at 40.9 percent, up by 19.2 index points compared to the year-ago level. Quarter-on-quarter, however, the index fell by 5.5 points. This quarter-on-quarter trend was consistent with the perception during the second quarter survey that the third quarter index would be slightly lower compared to the second quarter.
For the fourth quarter, respondents expected that business activity would surge as the index climbed to 53.0 percent, the highest level since the survey was first conducted in the second quarter of 2001.
During the quarter in review, respondents from the NCR (National Capital Region) were more bullish than their counterparts from the AONCR (Areas Outside the NCR).
Sectoral outlook consistent with overall outlook
Except for the construction sector, the sectoral sentiments on the macroeconomy in the current quarter generally tracked that of the overall sentiment as indices were on the uptrend, year-on-year, but lower quarter-on-quarter. Optimism in the construction sector, meanwhile, peaked at an all-time high of 53.1 percent in the third quarter.
Sentiment in the services sector remained strong at 53.3 percent. Respondents from the financial intermediation sub-sector registered the highest confidence level at 61.3 percent. The CI of the hotels and restaurants sub-sector exhibited an increase for both quarter-on-quarter and year-on-year, reflecting strong tourist arrivals. The improvement in the community and social services sub-sector can be traced mainly to the favorable outlook of health care-oriented institutions such as hospitals, medical colleges, and insurance providers.
The outlook for the industry sector inched up year-on-year at 35.6 percent, but was lower quarter-on-quarter. Specifically, manufacturing firms noted that production during the third quarter traditionally slackens quarter-on-quarter due to the start of the wet season and the slowdown in consumer spending after the enrollment period. The CI for the wholesale and retail trade sector declined marginally at 35.1 percent.
All sectors were bullish about the economy in the fourth quarter, with all indices climbing up year-on-year and quarter-on-quarter. The services sector index was the highest at 68.1 percent. The business confidence of the construction sector continued to be on the uptrend, with the CI at 63.8 percent. This is the sector’s highest CI in 6 years, mirroring the upswing in the real property sector. The wholesale and retail trade sector as well as the industry sector edged up to 51.6 percent and 41.4 percent, respectively.
Reasons for the slightly cautious outlook
The slightly more cautious business outlook in the third quarter relative to the second quarter was attributed by respondent firms to the following factors: 1) the slackening of production for the third quarter due to seasonality; 2) possible slowdown in the US economy due to problems in the housing market; 3) competition of cheap imports mostly from China; 4) increase in crude oil prices; and 5) power and water shortage.
Businesses have an upbeat view regarding their own operations
The construction sector was the most optimistic, in their own operations in the current quarter, with its index at 43.8 percent. The wholesale and retail trade sector likewise continued to be upbeat as its index (at 16.8 percent) was up year-on-year and quarter-on-quarter. Confidence indices of the industry and services sectors at 15.9 percent and 43.5 percent, respectively, were higher year-on-year and almost steady compared to levels last quarter.
Access to credit, financial condition and employment improve; expansion plan index declines slightly
The access to credit index increased to 10.4 percent, indicating an improvement in the availability of lending facilities as perceived by respondents. This trend is consistent with data on outstanding loans granted by banks, which has been on the uptrend since July 2006. The financial condition index, though still in the negative territory, eased to -5.1 percent. This indicated that firms’ cash positions are becoming generally more liquid. The employment outlook index for the next quarter rose to reach an all-time high at 21.1 percent, indicating that respondents are optimistic about employment conditions. The employment outlook was particularly strong for the construction and services sectors. Meanwhile, 28.7 percent of respondent industry firms indicated plans to expand operations in the next quarter.
Executives continued to cite competition, particularly emanating from local firms, and insufficient demand leading to low volume of sales as major risks to their business.
Expectations on selected economic indicators
Majority of the respondents anticipated that the peso would remain strong in the third and fourth quarters. The inflation rate and interest rates are expected to decelerate in the third quarter but could move up in the fourth quarter.
The third quarter 2007 BES was conducted from 09 July to 10 August 2007. A total of 1,063 firms nationwide were surveyed. They were drawn from the Securities and Exchange Commission 2005 Top 5,000 Corporations as follows: 477 companies in NCR and 586 firms in AONCR, covering all 17 regions nationwide. The overall survey response rate for this quarter is 68.9 percent (71.0 percent last quarter). For NCR, the response rate was 66.9 percent (78.4 percent last quarter); and for AONCR, the response rate was 70.5 percent (from 65.0 percent).
Friday, 24 August 2007
FRIDAY, AUGUST 24, 2007 | FINANCE
Original report at Gov.Ph News
Tacloban City -- The proposed P1.227 trillion national budget for 2008 will usher in an era of balanced budgets. After years of debt dependency, the government is finally operating on a self-supporting budget.
If approved, the 2008 budget will provide the government the advantage of predictability and flexibility in its national programs because of a reduced reliance on loans. Borrowings next year will be used to refinance or retire the principal but never in support of current operating expenditures. The government is finally living within its means and there must be no turning back.
The proposed budget will be totally supported by internal revenues. The government expects to generate revenues amounting to P1.236 trillion of which P1.108 trillion will come from taxes and P127 billion from non-tax revenues, with the Bureau of Internal Revenue expected to provide P885 billion, while the Bureau of Customs' share is P254 billion.
The proposed budget will also give the people bigger dividends on their taxes. The 2008 expenditure plan will be giving the people bigger returns on their taxes. The share of economic services was increased to 23.4 percent from 21 percent, social services to 30.06 percent from 28 percent, defense to 5 percent from 4.7 percent.
As pledged, the proposed national budget is doubling its investment in housing to P7.6 billion and increasing funds for economic services to P287 billion from P242 billion, social services to P368 billion from P320 billion, and defense to P61 billion from P53 billion.
Topping the list of recipients of the 2008 budget is the Department of Education with P146 billion, followed by the Department of Public Works and Highways, P94.5 billion; National Defense, P56.1 billion, and Interior, P52.6 billion. The Department of Agriculture P23.8 billion, Transportation and Communications, P22.3 billion; Health, P16.3 billion; Agrarian Reform, P13 billion; Judiciary P10.2 billion, and Foreign Affairs, P10.1 billion.
The government's confidence in a continued economic growth is reflected in the proposed 2008 national budget. It is hoped that with the new mandate the Filipino people has given them, the national legislators will also make history by passing the 2008 national budget on time and without delay.(PIA 8)
THURSDAY, AUGUST 23, 2007 | GOVERNMENT MANAGEMENT
Original article at Gov.Ph News
CAMP NAVARRO, Calarian, Zamboanga City – President Gloria Macapagal-Arroyo has ordered the payment of extra allowance for members of the Armed Forces of the Philippines (AFP) in actual combat assignments over and above the measly “monthly pay” that they are presently receiving.
This was one of the four-point “command guidance” that the President gave today to the top echelon of the Department of National Defense (DND) and the AFP as she presided over the joint AFP and Philippine National Police Command Conference here this morning.
The giving of actual combat pay to soldiers -- particularly to members of the Philippine Army and to the Marines, a special combat unit under the Philippine Navy (PN) -- is under the President’s first guidance for Filipinos to honor soldiers, both the dead and the living.
During the command conference, President Arroyo ordered the DND and the AFP to study her proposal and to start preparing the paper work for the additional pay for soldiers in actual combat assignments. The President’s “actual combat pay” proposal comes barely a month after she also increased the “subsistence allowance” of all military members starting last July.
The present combat pay of soldiers, whether fighting in battle zones or not, is P240 a month on top of their regular monthly pay.
Defense Secretary Gilbert Teodoro shared the President’s “command guidance” to the media after the command conference, with the President to his left, and the local officials of the area in attendance at the media briefing in The Mansion’s garden.
The second presidential “guidance” is the intensification of the government’s humanitarian efforts in the area. Here, the “AFP’s participation” would be the deployment of engineering brigades, and medical missions care of doctors from the AFP Medical Center.
The third guidance has the President reiterating the government’s commitment to the peace talks, which made even the Moro National Liberation Front (MNLF) and the Moro Islamic Liberation Front (MILF) agree to withdraw from some areas so that government forces could continue their operations against the Abu Sayyaf Group (ASG) whose members are believed to have decapitated and mutilated 10 of the 14 Marines who were killed in ambush in Basilan on July 10.
The fourth presidential guidance calls for “continued vigilance” on the part of the AFP and the Philippine National Police (PNP) against any “terrorism spillover” to other areas in the country.
The President shared her “command guidance” to the top officials of the AFP and the PNP after listening to situation reports from Lt. Gen. Eugenio Cedo, commander of the Western Mindanao Command (WestMinCom), who gave a situation update on Jolo and Basilan; Lt. Gen. Rodolfo Obaniana, commander of the Eastern Mindanao Command (EastMinCom), who discussed the situation in his area of responsibility; and Director General Oscar Calderon, head of the Philippine National Police (PNP), who discussed the PNP’s role in Jolo and Basilan.
During the media briefing, the President denied media reports that the number of evacuees from the Sulu-Basilan area is increasing; and asked the Office of the Presidential Assistant for the Peace Process (OPAPP) to give media the updated figures. The OPAPP representative said there are a total of 5,007 evacuees for both provinces.
Meanwhile, Basilan Rep. Wahab Akbar announced that the President had ordered the holding of the examinations for teachers right in Basilan, and some 2,000 teachers will be taking the tests this coming Sunday, Aug. 26.
Akbar also thanked the President for her administration’s development efforts in Basilan; a motion that Sulu Gov. Abdulsakur Tan, seconded, thanking the President for the medical missions and other humanitarian efforts in his province.
Before starting with the command conference at 10:45 a.m., the President met the surviving relatives of the late 2nd Lt. Roldan Somera of Armor Village, San Roque, Zamboanga City. She also gave them the financial assistance from the President’s Social Fund for soldiers who fall in battle.
Before leaving for Basilan -- where she held a lunch-hour interaction with the soldiers stationed in the fields while boodle-fighting – the President herself served lunch to the media members present in the press conference here.
Full article at the Business Mirror
UNDER the guidance of the Mathematics Trainers Guild (MTG), the Philippines’ “mathletes” hauled in their biggest harvest ever in global tournaments at the 3rd International Mathematics Competition in Singapore from August 17 to 20. A breathless MTG president, Dr. Simon Chua, ticked off the honors from memory, just hours after returning to Manila: 11 gold, 12 silver and 21 bronze medals, as well as 15 merit awards. The contest was participated in by no less than the geographically giant countries of China and India, together with Malaysia, Singapore and the Philippines.
MTG president Dr. Chua described the remarkable performance of the Pinoy MTG kids thus: “This is not only the achievement of the individual Filipino students nor of the MTG, but also of the Philippines.” He thanked the unremitting support of the parents, teachers and the school administrators, whom he regards as the “main factor why these kids remain achievers” in all the international math competitions. He thanked as well the MTG Kids “for the job best done.”
It had been, all in all, a grueling but fulfilling six weeks for the MTG, the parents and the children. The MTG had brought Filipino math warriors to nine successive competitions since July, the latest before Singapore being the 2007 China Math Olympiad for Girls, where the girls brought home three bronzes; the 2007 International Youth Mathematics Competitions’ Hong Kong Elementary Mathematics International Contest; and the Asia Intercities Teenagers Mathematics Invitation Competition in Hong Kong in early August.
Thursday, 23 August 2007
Full article at the BusinessWorld Online
A consortium of companies has committed to invest $250 million to expand and to modernize the facilities of the Toledo Power Plant in Cebu to address the foreseen higher power demand in the province.
The group is composed of Global Business Power Corp.; the Aboitiz family; Garcia-owned Vivant Corp.; and Taiwan-based Formosa group of companies.
Global Power, which is owned by the Metropolitan Bank & Trust Co., will hold majority interest in the project.
PLDT [25%] PHP 8.43B
San Miguel Corp [80%] PHP 7.88B
Globe Telecom [20%] PHP 7.4B
Banco de Oro [10%] PHP 7B
SM Investments Corp. [16%] PHP 5.9B
Piltel [32%] PHP 4.21B
Metrobank [34.3%] PHP 3.7B
SM Prime Holdings [11%] PHP 2.9B
Philex Mining Corp [200%] PHP 2.5B
Aboitiz Equity Ventures, Inc [57%] PHP 2.44B
Pilipinas Shell PHP [37%] 2.2B
Union Bank [105.7%] PHP 2.16B
DMCI Holdings Inc [137%] PHP 2B
Filinvest Development Corp [457%] PHP 1.9B
Megaworld [67%] PHP 1.45B
Jollibee Foods [26%] PHP 1.32B
GMA Network [23%] PHP 1.13B
International Container Terminal Services, Inc. [23%] PHP 1.045B
Pepsi [15.3%] PHP 1B
ABS-CBN [77%] PHP 739M
PNB [46%] PHP 622M
Filinvest Land [69%] PHP 529.43M
RCBC Capital [79.1%] PHP 360.8M
Metro Pacific Investments Corp [71%] PHP 165.1M
Splash Corporation [1,445%]PHP 158.05M
CitisecOnline [687%] PHP 59.85M
Wednesday, 22 August 2007
By Zinnia B. Dela Peña
Original article at the Philippine Star
Local share prices soared 9.8 percent higher yesterday in the biggest single-day gain in almost seven years, as investors played catch up with global bourses after a holiday break, traders said.
The Philippine Stock Exchange composite index (PSEi) added 283.18 points to 3,167.52, its biggest gain since rising 17.6 percent on Jan. 22, 2001 – the first trading day after President Estrada was ousted on corruption allegations and Vice President Gloria Macapagal-Arroyo was installed as President.
The broader all-share index ended up 150.94 points to 2,016.16. Out of 156 stocks traded, 135 advanced, eight declined, and 13 were unchanged. A total of 4.6 billion shares worth P5.6 billion were traded.
“We’re just playing catch up,” said Francisco Liboro, president of PCCI Securities Brokers. “Foreign buying was primarily on blue chips. Even there, you see a flight to quality.”
Monday, 20 August 2007
PRESIDENT SETS FIRST MEETING, GETS SUPREME COURT CONSENT FOR NEW COUNCIL
By Mia M. Gonzalez
Original report at the Business Mirror
PRESIDENT Arroyo is preparing to call a meeting that will have the judiciary, executive and legislature poring over the problem of how to harmonize laws and regulations with the situation obtaining on the ground so as to help improve the business climate.
Questions such as, “Is the action of the court and the pace of court action on big government projects tied up in litigation so that investors are discouraged?” would be on the agenda.
The body will be similar to the Legislative-Executive Development Advisory Council (Ledac). Mrs. Arroyo has ordered the solicitor general to review whether a law is needed to set up a “Legislative-Executive-Judiciary Advisory Council” and make other necessary legal preparations.
Solicitor General Agnes Devanadera reported that the President’s directive also included instructions for her to plan the first meeting, to be held “most likely in September.”
The Chief Executive had a dialogue with the leaders of local and foreign business chambers and key business groups in Malacañang on Friday, and it was possible the idea for such a body, which has long been on her mind, according to Devanadera, finally ripened.
She said the President has obtained Chief Justice Reynato Puno’s consent for such a council. “Apparently, it has always been in her mind already. Because she was saying, ‘Just like Ledac, I have thought of really coming up with something [like it].’”
“So the President announced at the dialogue there that there will be something like the Ledac, a legislative-executive and judiciary advisory Council. She ordered me to prepare for the first meeting of the ‘Lejac’.”
Devanadera said she needs to find out if the body would have to be created by law, considering that it would involve different branches of government.
She said for the first “Lejac” meeting, it is possible that among the topics is the “action of the court and the pace of court action” on big government projects tied up in litigation.
“We can talk about the expropriation on the road right of way because [in] SLEX [South Luzon Expressway] for example. . .They cannot implement [connect it to the Star Tollway going to Batangas port] because of the writ of possession.”
She said the primary aim is to discuss the “interrelationship (of laws and court decisions) and the effects of decisions, let’s say, of the court . . . . The court may say that the reasons why we have this kind of decision is because the law that you have enacted does not give us some other [choice].”
Devanadera cited the case of the Banilad Friars Land Estate in the First District of Cebu City, where the Supreme Court ruled that “all lands should revert to the government,” but this did not happen because of a technicality provided by a law “that requires that some documents must be signed by the Cabinet secretary,” or the Secretary of the Interior.
“Unfortunately, the land title [did not have the required signature] so Congress passed a law to cure that defect of an existing law. Things like that.”
Also, during the dialogue, the President asked Devanadera to report about the government’s victory against German firm Fraport AG at the International Center for Settlement of Investment Disputes (Icsid) of the World Bank in Washington, where the WB investment referee junked the claims of Fraport for the return of its $425-million investment in the controversial Ninoy Aquino International Airport Terminal 3.
This drew a lot of reaction developing into a discussion of the foreign businessmen’s concerns about the antidummy law.
“They’re just concerned about how the antidummy law will have to be complied with. There are legal theories but that was fully discussed in the decision of Icsid.”
The Chief Executive then stressed to the businessmen that foreign investments are safe in the country for as long as they comply with Philippine laws. “That was reiterated by the President during her subsequent meeting with the different chambers of commerce and the international community.”
Devanadera said other topics included concerns about power costs, and the growing “mismatch” between Philippine graduates and the kind of jobs available in the country. “There was a longer discussion on quality manpower because we have an oversupply of what we don’t need.”
She added the peso was not discussed because at the time, the “market was correcting itself” and the “businessmen were very happy with the performance of our revenues.”
Other officials at the meeting were Finance Secretary Margarito Teves, Trade Secretary Peter Favila, Energy Secretary Angelo Reyes and Bangko Sentral Governor Amando Tetangco Jr.
Full report at ABS-CBN News
The Philippines has saved as much as P30 billion in interest payments in the first seven months of the year due to the strength of the peso against the US dollar as well as lower than programmed interest rates.
Finance Undersecretary Gil Beltran said Tuesday that the government's interest payments fell 16.4 percent to P159.5 billion from January to July from P190.7 billion in the same period last year.
He pointed out that the strong peso and low interest rates enabled the government to save as much as P30 billion in the first seven months as it was supposed to pay P189.5 billion in interest payments.
He explained that interest payments dropped 12.6 percent to P29 billion in July from P34.2 billion in the same month last year resulting to savings of as much as P9 billion.
Simulations made by the Department of Finance showed that the Philippines saves as much as P4.2 billion in debt service requirement for every P1 appreciation against the US dollar and another P5.1 billion for every percent decline in domestic interest rates.
Survey: Women executives on top in RP
Agence France Presse
Women are now outnumbering men at the top of the corporate ladder in the Philippines and the trend is set to increase over the coming years, the country's labor minister said Monday.
The key was access to education, with one in three of the estimated 12.8 million working women having reached college compared to only one in five of 20.1 million working Filipino males, Labor Secretary Arturo Brion said.
Official figures showed the number of women in supervisory and executive positions rose from 1.86 million in 2002 to 2.257 million last year.
The number of men also rose, but at a slower pace -- from 1.4 million in 2002 to 1.63 last year.
The trend is set to continue: last year 97,000 women joined the executive roll compared to just 16,000 men.
Brion said the ratio of women holding top posts was the world's best. A Grant Thornton International Business Report from earlier this year showed 97 percent of Philippine businesses have women in senior management roles.
That compares to the global average of 59 percent.
By Iris C. Gonzales
Original report at the Philippine Star
Remittances by state-owned agencies to the Bureau of the Treasury (BTr) boosted state coffers, helping the government raise much needed revenues.
Dividends, guarantee fees and interest payments on advances remitted by state-run corporations to the National Treasury jumped 59 percent in the first seven months of the year, the Department of Finance (DOF) reported during the weekend.
Remittances by government-owned and controlled corporations (GOCCs) and government financial institutions (GFIs) reached P12.04 billion from January to July this year or P4.48 billion higher than the P7.55 billion remitted in the same period last year, Finance Undersecretary Jeremias Paul Jr. told reporters.
According to Republic Act 7656 or the Dividends Law of 1994, GOCCs and GFIs are required to remit half or 50 percent of the income earned in each fiscal year to the National Government. The remittance should be in the form of cash or in unencumbered or real estate properties with clean titles.
Paul said guarantee fees alone amounted to P5.3 billion in the first seven months of the year, already beating the full year goal of P1.9 billion.
DOF data further showed that the fees were 453 percent higher than the P1.03 billion collected in the first seven months of last year and P3.6 billion more than the P2.1 billion collected the entire 2006.
Paul said interest on advances to GOCCs amounted to P37 million in the first seven months of the year or 61 percent lower than last year’s P95 million. The amount is also way below the P400-million target for 2007.
“We will collect more because we expect at least P1 billion this year. They (GOCCs) have to pay their interest on their advances,” he said.
Dividends remitted by state-run companies, meanwhile, amounted to P6.3 billion from January to July this year or P2.3 billion more than the full-year goal of P4 billion, Finance Undersecretary and Acting National Treasurer Roberto Tan said.
The dividends collected in the first seven months of the year, however, were two percent lower than the P6.43 billion collected in the same period last year.
State-run government firms remitted P3.17 billion while GFIs, including the Bangko Sentral ng Pilipinas, poured in P2.5 billion. Tan said the biggest contributors were the Philippine Ports Authority (PPA) with P1.3 billion, followed by Philippine National Oil Co. (PNOC) with P1.2 billion.
Other contributors were the Metropolitan Waterworks and Sewerage System, Local Water Utilities Administration, Light Rail Transit Authority, Philippine Economic Zone Authority, National Development Co. and the National Housing Authority.
The government has been urging GOCCs and GFIs to increase their dividend remittances to the Treasury as it works to contain its yearend budget deficit at P63 billion.
By Des Ferriols
Full article at the Philippine Star
In the wake of the panic over the US subprime credit market, the Bangko Sentral ng Pilipinas (BSP) said it has examined the exposure of banks in similar instruments and found only insignificant amounts in collateralized debt instruments as a whole.
BSP Governor Amando M. Tetangco Jr. told reporters over the weekend that the banking industry’s minimal exposure in collateralized debt obligations (CDOs) accounted for only 0.2 percent of its total assets.
CDOs are a type of asset-backed security and structured credit product that gain exposure to the credit of a portfolio of fixed income assets.
CDOs divide the credit risk among different tranches: senior tranches (rated AAA), mezzanine tranches (AA to BB), and equity tranches (unrated).
According to Tetangco, the banking industry’s CDO portfolio consisted only of senior and mezzanine tranches and no subprime assets.