Philippine government bonds maturing in 2037 rose for a second day on speculation the nation will win an investment-grade rating next year after Standard & Poor's raised the credit outlook to positive. The peso dropped.
S&P, which ranks the Philippines BB+, the highest junk level, cited improved governance and public finances for the revision as official data showed Dec. 19 that tax revenue climbed to a record. President Benigno Aquino signed a law yesterday that will raise excise duty on cigarettes and alcohol, which Finance Secretary Cesar Purisima said will generate an additional 34 billion pesos ($826 million) in 2013.
"We had pretty good news yesterday with S&P's upgrade from neutral to positive," said Jill Singian, a bond portfolio manager at Bank of the Philippine Islands (BPI) in Manila. "It's giving a lot of support to buying interest but players will not make a bold move today. We are going into a long weekend."
The yield on the 6.125 percent notes due October 2037 declined two basis points, or 0.02 percentage point, to 5.64 percent as of 10:09 a.m. in Manila, according to prices from Tradition Financial Services. The rate advanced two basis points this week and has dropped 28 basis points since the securities were issued in October.
Local financial markets will be closed on Monday and Tuesday for the Christmas holidays.
The peso weakened 0.2 percent to 41.145 per dollar in Manila and declined 0.1 percent for the week, according to Tullett Prebon Plc. It appreciated 6.6 percent this year, the second-best performance among Asian currencies after the South Korean won.
Bangko Sentral ng Pilipinas will announce measures next week to manage capital inflows, Deputy Governor Nestor Espenilla told reporters in Manila late yesterday.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, was unchanged at 4.4 percent today and this week. It fell 335 basis points this year. (http://is.gd/Ue9eZd)
Bloomberg
