Bloomberg News

Philippine 25-Year Bonds Drop Most in Week on Sale; Peso Climbs

October 24, 2011

Oct. 24 (Bloomberg) -- Philippine 25-year bonds fell the most in more than a week on speculation demand for the notes will weaken as the government sells more debt. The peso strengthened.

Yields on the 7.625 percent debt due September 2036 climbed to the highest level since Oct. 13 as the Bureau of the Treasury prepares to auction 9 billion pesos ($208 million) of the securities tomorrow. The government rejected bids for 91-day bills for a second straight auction last week after selling about 110 billion pesos of bonds to individuals.

“If tomorrow’s auction is successful and the bonds are awarded at yields below market expectations of about 7.2 percent, then we may see some of the momentum return to the long-term paper,” said Ryanna Berza-Talan, a fund manager at Banco de Oro Unibank Inc.’s trust group that oversees about $16 billion of assets.

The yield on the 7.625 percent 25-year debt rose six basis points, or 0.06 percentage point, to 7.57 percent, according to midday fixing prices at Philippine Dealing & Exchange Corp. That was the biggest increase since Oct. 13.

The peso rose 0.4 percent to 43.268 per dollar at close of trading, Tullett Prebon Plc prices showed, on speculation Europe’s policy makers will contain the region’s debt crisis.

European officials rejected a forced restructuring of Greek debt at an Oct. 23 meeting in Brussels, inching toward plans to shore up banks’ capital at the next meeting on Oct. 26. A U.S. Commerce Department report on Oct. 27 will show the world’s biggest economy grew at an annualized 2.5 percent last quarter, after advancing 1.3 percent in the preceding three months, according to a Bloomberg survey.

The Philippine government may raise its budget for stimulus spending by about 20 billion pesos, Budget Secretary Butch Abad said on Oct. 17, five days after President Benigno Aquino unveiled a 72.1 billion-peso package to boost increase public works and reduce poverty.

The government approved about 6.3 billion pesos in spending to upgrade Manila’s commuter rail system, Abad said today.

--Editors: Anil Varma, Andrew Janes

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To contact the reporters responsible for this story: Clarissa Batino at cbatino@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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