THE Philippine peso fell from near a seven-year high against the dollar as renewed concern about the US housing market prompted investors to cut holdings of emerging-market assets. Government bonds fell.

The peso was the worst performer of the 10 most-actively traded Asian currencies outside Japan after Citigroup Inc., the biggest US bank, Monday forecast mortgage defaults will plague the financial industry for the rest of the year. The Philippine benchmark stock exchange index lost 1.2 percent, its biggest decline in a week.

“The peso is being affected by the bad news in the US market last night,” said Estelito Biacora, vice president for treasury at Bank of the Philippine Islands in Manila. “The Philippines is an emerging market and we will definitely be affected by any risk aversion.”

The peso weakened 0.7 percent to 44.335 per dollar as of the 4 p.m. close in Manila, according to Tullett Prebon Plc, the world’s second-largest inter-dealer broker.

The local currency also weakened as a chart traders use to predict movements suggested its recent gain was excessive. The dollar’s 14-day relative strength index against the peso was 25.1 Monday, below the 30 level that signals a currency is likely to change direction.

“We’re seeing a correction after the recent rally of the peso,” Biacora said.

The peso is still the best performer of the 10 most-actively traded Asian currencies outside Japan this month, gaining 1.6 percent.

Government bonds fell, pushing the yield on the benchmark four-year note to the highest in more than two weeks.

The yield on the 16 1/2 percent bond due October 2011 rose 5 basis points to 6.54 percent at the 11:15 a.m. fixing at Philippine Dealing & Exchange Corp. That is the highest since October 1. The price fell 0.2117, or P21 per P10,000 face amount, to 134.431. A basis point is 0.01 percentage point.

The government on Tuesday sold P7 billion ($158 million) of 10-year bonds at an average yield of 7.113 percent. The Bureau of the Treasury first auctioned the notes due in August 2017 on August 21 at a coupon of 7.75 percent.

The perceived risk of owning Philippine government bonds increased, according to credit-default swaps.

Contracts tied to the government’s dollar-denominated debt rose 3 basis points to 121.5 basis points, prices from BNP Paribas SA show. The cost to protect $10 million of debt from default for five years is equivalent to $121,500. ---Bloomberg

THE Development Bank of the Philippines (DBP) has expanded the coverage of its hedging facility to include overseas Filipino workers (OFWs).

Local stocks fall on high oil costs

PHILIPPINE stocks fell the most in a week on higher oil prices and renewed concern over the US housing slump after Citigroup Inc. said defaults may worsen in the world’s biggest economy.

THE Philippine peso fell from near a seven-year high against the dollar as renewed concern about the US housing market prompted investors to cut holdings of emerging-market assets. Government bonds fell.

SHOEMART Inc., the main property arm of the Sy Group, is allotting as much as P5.1 billion for the acquisition of shares held by public investors in listed SM Development Corp. (SMDC), which invests in residential development.

SMART Broadband Inc. (SBI), the wireless broadband unit of Smart Communications Inc., is acquiring some assets of Mindano-based Cruz Telephone Co. Inc. (Cruztelco).

A CONVERTIBLE share is that kind of share which is changeable by the shareholder from one class to another class at a certain price and within a certain period (De Leon, The Corporation Code of the Philippines, Annotated, 2002 Ed., p. 83). It can be said also that this is tantamount to a right to convert stock into a new kind of stock given to the stockholder by the contract under which he acquires the said stock (In re Phoenix Hotel Co. of Lexington, Ky., 83 F2d 724, affg 13 F Supp 229).