Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Philippine 20-Year Bond Yield Drops to 1-Year Low After SDA Cut

March 14 (Bloomberg) -- Philippine 20-year bonds gained, pushing the yield to a one-year low, as the central bank cut the interest rate on its special-deposit accounts for a second time this year. The peso weakened

Bangko Sentral ng Pilipinas reduced the rate on the accounts to 2.5 percent from 3 percent today and set the rate on all tenors for its reverse-repurchase facility at 3.5 percent, the same as the overnight borrowing rate, Governor Amando Tetangco said in a briefing. The two SDA cuts this year will result in 20 billion pesos ($493 million) of annual savings for the monetary authority, Assistant Governor Cyd Amador said.

“Bids continue to flock to the long-end of the curve to lock-in spreads after the SDA rate cut,” said Bunny Bernardo-Recto, vice president at Chinatrust Philippines Commercial Bank Corp. in Manila.

The yield on the 5.875 percent bonds due March 2032 fell three basis points, or 0.03 percentage point, to 4.48 percent after the decision, according to Tradition Financial Services. That’s the lowest since the notes were first sold a year ago.

The peso closed 0.1 percent lower at 40.625 per dollar before the policy announcement, according to Tullett Prebon Plc. It’s the best-performing emerging-market currency in the past 12 months, appreciating 5.6 percent. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 11 basis points to 3.62 percent.

BSP will continue to review all tools and will take into account the rising level of liquidity, Assistant Governor Amador said at the briefing today. The monetary authority has raised its inflation forecast for 2013 to 3.3 percent from 3 percent, she said.

The savings from the first SDA rate cut will allow BSP “to participate a little bit more” in the foreign-currency market, Monetary Board Member Felipe Medalla said yesterday.

To contact the reporter on this story: Clarissa Batino at cbatino@bloomberg.net

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

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.