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Philippine Bonds Rise as Peso Gains: World's Biggest Mover
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By Oliver Biggadike
Nov. 24 (Bloomberg) -- Philippine peso-denominated bonds rose, the biggest fluctuation of any government debt market today, on speculation peso gains will allow the central bank to retain this month's partial interest rate cut.
Bangko Sentral ng Pilipinas on Nov. 2 cut the rate it pays to commercial banks on overnight deposits between 5 billion ($101 million) and 10 billion pesos to 5.5 percent from 7.5 percent. The central bank will review the policy next month to see whether it has helped boost loan growth, Deputy Governor Diwa Gunigundo said on Nov. 21.
``The strength of the peso versus the dollar eliminated the worry that lower interest rates will weaken the foreign-exchange rate,'' said Rafael Algarra, head of the treasury at Security Bank Corp. in Manila. ``With most banks having excess cash, this created demand for higher-yielding securities.''
The yield on the benchmark 10-year note fell 22 basis points, or 0.22 percentage point, to 6.83 percent as of 1:03 p.m. in Manila, according to the Money Market Association. The price of the 6.25 percent bond due November 2016 rose 1.5281, or 152.8 pesos per 10,000 pesos face amount, to 95.8624. Bond yields move inversely to prices.
The peso traded at 49.745 against the dollar at 1:11 p.m. in Manila, the strongest since May 2002. The central bank's rate for deposits of more than 10 billion pesos is 3.5 percent.
The world's biggest movers are based on changes in price or yield and are screened for the size of the market and amount of daily trading