Feb. 2 (Bloomberg) -- Theresa Marcial-Javier, senior vice president in Manila at BPI Asset Management, which oversees 670 billion pesos ($15.7 billion), comments on the outlook for Philippine bonds in an interview. BPI Asset prefers buying debt maturing in between 10 years and 25 years as yields on the notes may fall as much as 50 basis points, she said.
“We expect inflation to be generally low. The central bank has a lot of room to cut the policy rate. Our trading team is looking at at least a 50-basis point rate cut. We’ve already seen one 25-basis point cut this year, maybe there will be another 25-basis point reduction by March.
‘‘We expect the currency to remain strong, partly because of inflows plus the overall positive fundamentals of the country. Remittance is a mature industry that will probably grow at most 8 percent.
‘‘The issue is how much liquidity there is in the system, where yields might go given the level of liquidity. There’s 1.7 trillion pesos in the special deposit account of the central bank. That’s short-term money being parked that can easily be channeled into other uses.
‘‘For the funds that we are managing, our team is still looking at a further drop in bond yields at the long end, in the 10 years and all the way up to 25 years. There may be corrections along the way but any correction would be an opportunity to build up long positions. Individual customers are looking at the sweet spot of five to seven-year corporate bonds.’’
--With assistance from Clarissa Batino in Manila. Editor: Anil Varma
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