Philippine Bonds Fall Most in Three Months on Supply Outlook

Dec. 18 (Bloomberg) -- Philippine 19-year sovereign bonds fell by the most in three months after the government said it may increase the size of debt auctions in the first quarter. The peso weakened.

There’s a plan to boost sales to take advantage of surplus cash in the banking system, Treasurer Rosalie de Leon told reporters in Manila yesterday after data showed money sent home by Filipinos working overseas climbed to a record. The nation’s local-currency notes returned 9 percent this year, the third-best performance among 10 Asian fixed-income indexes compiled by HSBC Holdings Plc.

“There’s uncertainty with regards to the supply of bonds next quarter,” said Jan Briace Santos, a debt trader who helps manage the equivalent of $17 billion at BPI Asset Management Inc. in Manila. “This is a short-term correction. Fundamentally, we’re still sound.”

The yield on the government’s 8 percent notes due July 2031 rose six basis points, or 0.06 percentage point, to 5.6 percent as of 4:14 p.m. in Manila, according to prices from Tradition Financial Services. That was the biggest increase since Sept. 17 and the highest level in three weeks. The yield has dropped 57 basis points this year.

Remittances increased 8.5 percent to $1.93 billion in October from a year earlier, beating the median estimate in a Bloomberg survey for a rise to $1.89 billion.

The peso fell 0.1 percent to 41.075 per dollar, according to Tullett Prebon Plc. The currency reached 40.840 on Nov. 29, the strongest level since March 2008. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 20 basis points to 4.2 percent.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net