Philippine Bonds Rise After Surprise Drop in Exports; Peso Gains

Philippine bonds rose as official data showed exports unexpectedly fell in March and first-quarter rice production declined. The peso strengthened.

Overseas sales dropped 1.2 percent from a year earlier to $4.3 billion, the National Statistics Office in Manila said today. The median of eight estimates in a Bloomberg News survey was for a 10 percent gain. The central bank will consider the export data at its June 14 meeting and see if there’s a need to adjust its policy stance, Governor Amando Tetangco said in a mobile-phone message. Rough-rice output fell 1 percent last quarter, Agriculture Secretary Proceso Alcala said today.

“A confluence of factors seem to point to the central bank keeping rates low, at current levels, for a while,” said Bunny Bernardo-Recto, vice president at Chinatrust Philippines Commercial Bank Corp. in Manila. “The Europe turmoil is back in the picture again, oil prices have dropped and exports are weak.”

The yield on the 8 percent July 2031 peso bond fell three basis points, or 0.03 percentage point, to 5.94 percent as of 4:23 p.m. in Manila, declining for the first time in six days, according to Tradition Financial Services. The peso closed 0.1 percent stronger at 42.385 per dollar after falling as much as 0.2 percent earlier, Tullett Prebon Plc data showed.

One-month implied volatility, which measures exchange-rate swings used to price options, rose 50 basis points to 5.50 percent. Oil traded near the lowest level in more than three months.

Bangko Sentral ng Pilipinas kept its benchmark overnight borrowing rate at a record low 4 percent last month after two rate cuts this year.

Exports will improve this year and the March data showed growth from the previous month, central bank Deputy Governor Diwa Guinigundo said in a mobile-phone message. Overseas sales and farm output make up more than 30 percent of the $200 billion Southeast Asian economy.