Philippine 10-Year Bond Yield at 5-Month Low on Rating Optimism

Philippine 10-year bonds rose, pushing the yield to a five-month low, on optimism gains in government revenue and exports boost the odds of the nation winning an investment-grade rating. The peso was steady.

The Bureau of Customs collected 24.5 billion pesos ($602 million) in January, meeting its monthly target for the first time since March 2011, BusinessWorld reported last night on its website, citing Commissioner Ruffy Biazon. Overseas shipments climbed 16.5 percent in December, the biggest increase in three months, an official report showed today.

“The positive news gave confidence to buyers,” said Jan Briace Santos, a debt trader who helps manage the equivalent of $18 billion at BPI Asset Management Inc. in Manila. “A recovery in exports is good for the economy, and higher revenues will help support the case for a rating upgrade.”

The yield on the 4.75 percent bonds due September 2022 dropped six basis points, or 0.06 percentage point, to 3.75 percent as of 4:46 p.m. in Manila, according to prices from Tradition Financial Services. That is the lowest level since the notes were first sold in September 2012.

The Philippines has the highest junk rating at Moody’s Investors Service, Fitch Ratings and Standard & Poor’s. S&P raised the nation’s credit outlook to positive in December and said an upgrade is possible in 2013 on improved governance and public finances.

The peso closed unchanged from yesterday at 40.69 per dollar, data from Tullett Prebon Plc show. One-month implied volatility, a measure of expected moves in exchange rates used to price options, was steady at 4.25 percent.

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