Philippine Bonds Advance After Treasury Caps Borrowing Costs

Philippine bonds gained after the government capped borrowing costs at yesterday’s sale of 20-year securities. The peso halted a two-day decline.

The Bureau of the Treasury sold 6.7 billion pesos ($159 million) of notes, less than the 9 billion pesos on offer, with bids reaching 14.1 billion pesos. The debt was sold at an average yield of 6.02 percent, which would have risen to 6.05 percent if the government had met its sales target, data from the treasury showed. The Philippines’ BB+ long-term foreign- currency rating with a stable outlook was reaffirmed by Fitch Ratings yesterday.

“The auction was better than expected and the bids were below the market consensus,” said Speedy Delfino, a fixed- income trader at East West Bank Corp. in Manila. “The positive news on the external environment also supports investor confidence.”

The yield on the 5.875 percent notes due February 2032 fell seven basis points, or 0.07 percentage point, to 5.95 percent as of 4:12 p.m. in Manila, according to Tradition Financial Services. The peso closed 0.4 percent higher at 42.11 per dollar, data from Tullett Prebon Plc showed. One-month implied volatility, which measures exchange-rate swings used to price options, rose 46 basis points to 6.96 percent.

The Philippines is rated at the highest junk level by Fitch and two levels below investment grade by Standard & Poor’s and Moody’s Investors Service. Achieving an investment-grade rating is only “a matter of time,” the government said in a statement yesterday.

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