Philippine Bonds Gain Before 10-Year Debt Auction; Peso Steady

Philippine bonds advanced on speculation the government won’t allow borrowing costs to rise at an auction of 10-year debt today. The peso was steady.

The government last sold securities due 2022 at an average yield of 5.159 percent in March. Bangko Sentral ng Pilipinas is unlikely to change its monetary-policy stance soon, Governor Amando Tetangco said yesterday. The central bank held its benchmark rate at a record-low 4 percent in April after two cuts earlier this year.

“There are expectations the government will not accept higher bids, which would signal they’re comfortable with their current cash position,” said Jan Briace Santos, a fixed-income trader who helps manage the equivalent of $16 billion at BPI Asset Management Inc. in Manila. “There would be room for yields to go down.”

The yield on the 5.75 percent bonds due November 2021 fell 15 basis points, or 0.15 percentage point, to 5.40 percent as of 10:57 a.m. in Manila, according to Tradition Financial Services.

The peso was little changed at 42.335 per dollar, prices from Tullett Prebon Plc showed. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 5 percent.

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net