Singapore: Philippine five-year bonds dropped on speculation banks will seek to push up yields at a price-setting auction of 20 billion pesos (Dh1.69 billion) of government debt today. The peso fell.
The government will price five- and 10-year retail bonds at the sale to banks.
Lenders who buy the notes will then be able to sell the securities to retail investors until March 1.
Banks must win at least 500 million pesos worth of debt at the auction to qualify as a selling agent, according to the Treasury's notice of the offering.
Lenders "want to raise rates for the retail bonds before the pricing," said Yvette Marquez-Carlos, who helps manage the equivalent of $11 billion at BPI Asset Management in Manila.
"They will push it."
The yield on the seven per cent bond due January 2016 rose nine basis points to 6.371 per cent at the 11.30am, local time, fixing in Manila, according to the Philippine Dealing and Exchange Corporation. A basis point is 0.01 percentage point.
The government will offer a minimum of 30 billion pesos of the retail bonds and may sell a "higher amount" if demand is robust, Treasurer Roberto Tan told reporters on February 18.
The Philippines, which spurned bids at five debt auctions since the start of this year to cap borrowing costs, is looking at other funding options to plug its budget deficit.
The government has said it hopes to narrow the shortfall to 290 billion pesos this year from an estimated 310 billion pesos in 2010, Budget Secretary Butch Abad told reporters on February 16.
The peso declined 0.2 per cent to 43.41 per dollar at the 4pm close, according to prices from inter-dealer broker Tullett Prebon.
