Philippine Bonds Rise on Rating Upgrade Optimism; Peso Weakens
The country has “entered into an era of renewed stability and confidence,” aided by efforts to curb tax evasion and end wasteful spending, President Benigno Aquino said in a speech in New York this week that was posted on the government’s website yesterday. The deficit was 43.7 billion pesos ($1 billion) in the first seven months of 2011, 20 percent less than in the same period of 2010. August data are expected on Sept. 23.
“The selloff in the past few days was overdone,” said Marcelo Ayes, senior vice president at Rizal Commercial Banking Corp. in Manila. “With yields having risen to a two-month high, investors saw these as attractive levels.”
The yield on the 6.5 percent April 2021 peso bond fell 43 basis points, or 0.43 percentage point, to 6.17 percent, according to Philippine Dealing & Exchange Corp.’s midday prices. It climbed to 6.59 percent yesterday, the highest level since July 12. The peso dropped 0.1 percent to 43.533 per dollar at the close of trading, Tullett Prebon Plc data showed. It rose as much as 0.2 percent earlier.
The nation is nearing its goal of achieving an investment- grade credit rating, central bank Governor Amando Tetangco said on Sept. 19 as the government prepares to meet Standard & Poor’s, Moody’s Investors Service and Fitch Ratings in the U.S.
The government will probably sell 10-, and 15-year bonds targeted at individuals next month and maintain the weekly debt auction size at 9 billion pesos next quarter, Deputy Treasurer Eduardo Mendiola said in an interview yesterday.
“The only threat of debt supply is the retail bonds and there’s sufficient liquidity in the market to handle that,” Rizal Bank’s Ayes said.
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