Philippine 10-year bonds gained the most in almost 14 months this week on speculation a Moody’s Investors Service upgrade of the nation’s sovereign rating will
lower government borrowing costs.
Moody’s on Thursday raised the Philippines’s rating to “Baa2” from “Baa3” and assigned a stable outlook, citing debt reduction and improvements in fiscal management. The move put the nation on a par with Spain and higher than Indonesia.
“The Moody’s action was a big factor,” said Dave Estacio, vice president and treasury chief dealer at First Metro Investments Inc. “If it hadn’t happened, yields would have probably risen as we approach the long holiday break.”
The yield on peso bonds due November 2024 fell 16 basis points this week, the most since the five-day period ended October 25 last year, to 4.17 percent in Manila, according to noon fixing prices from Philippine Dealing & Exchange Corp. The yield dropped 18 basis points, or 0.18 percentage point on Friday. That move was also the biggest since October 2013.
“As we move up on the credit-rating scale, it’s expected the country will be increasingly placed on the radar screen of investors and of course, it’s beneficial to us,” BSP Governor Amando M. Tetangco Jr. said in a Bloomberg TV interview on Friday. “It’s also an affirmation of the efforts we’ve done over the years to implement structural reforms and make the economy
more resilient.”
Bangko Sentral ng Pilipinas on Thursday kept the rate it pays lenders for overnight deposits at 4 percent, as predicted by all 17 economists in a Bloomberg survey.
The peso closed down 0.2 percent on Friday and 0.12 percent this week to 44.58 a dollar, prices from Tullett Prebon Plc. show. The Philippine Stock Exchange Index rose 2.2 percent, the sharpest gain since October 2, 2013, on speculation Moody’s move will attract more investors.