Bloomberg News

Philippine Bonds Gain as Consumer-Price Gains Ease, Peso Steady

June 05, 2012

Philippine bonds gained as a government report showed inflation eased in May. The peso was little changed.

Benchmark 20-year bonds snapped four days of losses as data showed consumer prices rose 2.9 percent from a year earlier, after a 3 percent advance in April. Economists surveyed by Bloomberg had forecast a 3 percent increase. Price movements are “generally well-behaved,” central bank Governor Amando Tetangco said after the report.

“Inflation is supportive of a monetary-rate decision to keep rates at low levels,” said Jan Briace Santos, a fixed- income trader who helps manage the equivalent of $16 billion at BPI Asset Management Inc. in Manila. “It strengthens confidence in the central bank’s ability to manage inflation and keep it benign.”

The yield on 8 percent government bonds due July 2031 fell two basis points, or 0.02 percentage point, to 6.08 percent as of 4:00 p.m. in Manila, according to Tradition Financial Services.

The peso was little changed at 43.465 per dollar from 43.483 yesterday, prices from Tullett Prebon Plc show. The currency earlier rose to as high as 43.29 per dollar. One-month implied volatility, a measure of exchange-rate swings used to price options, was steady at 7.50 percent.

Bangko Sentral ng Pilipinas continues to monitor developments in Europe and the U.S. to assess the potential impact on Philippine consumer prices and growth prospects “to see if there is any need to make adjustments in our policy stance,” Tetangco said. Policy makers will meet on June 14 to review its record-low 4 percent benchmark rate.

The government rejected all bids for bonds due 2019 at an auction today.

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net

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


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