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Peso GS Weekly: 10Y demand soars, curve stays steep
Steady local bond market as strong demand for the new 10-year bonds and a steepening curve drive interest for longer-duration bonds.
By Metrobank Local Currency Trading Department and Janssen Roman
What happened last week
The market opened quietly after Easter, with trading focused mainly on R5-17, as investors positioned for the 10-73 settlement. Yields moved 1–4 basis points (bps) from previous levels, with the 3Y trading lower on offshore interest. Despite a global bond selloff, PHP GS held steady, supported by two-way activity in the belly of the curve.
Attention remained on the 10-year jumbo FXTN (10-73), with the Bureau of the Treasury (BTr) eventually raising PHP 300 billion after demand surged, prompting an earlier-than-planned close to the offering. Trading volume picked up midweek as global bonds rallied, lifting liquid PHP GS by up to 3bps. Secondary market yields for active bonds like R5-18 and 10-69 saw minor moves.
With the 10-73 now priced and free to trade (6.32–6.35%), activity slowed ahead of settlement. The trading desk sees good value in rotating out of 3–4Y bonds yielding 5.75–5.85% into the new 10Y at 6.325–6.375% to capture term premium.
Looking ahead, the BTr returns to regular auction sizes starting with a 5Y bond this week, with early indicative yields at 5.850–6.000%. Price action is expected to stay sideways absent fresh catalysts.
BVAL Rates
| Tenor | 25-Apr-25 | 16-Apr-25 | Change |
|---|---|---|---|
| 1M | 5.20% | 5.25% | -0.05% |
| 3M | 5.46% | 5.41% | 0.05% |
| 6M | 5.61% | 5.63% | -0.02% |
| 1Y | 5.74% | 5.68% | 0.06% |
| 2Y | 5.75% | 5.77% | -0.02% |
| 3Y | 5.80% | 5.81% | -0.01% |
| 4Y | 5.85% | 5.87% | -0.02% |
| 5Y | 5.92% | 5.94% | -0.02% |
| 7Y | 6.09% | 6.11% | -0.02% |
| 10Y | 6.34% | 6.30% | 0.04% |
| 20Y | 6.32% | 6.32% | 0.00% |
| 25Y | 6.32% | 6.32% | 0.00% |
What we can expect
With the 10-73 successfully raised, focus will turn to its settlement and secondary market performance, where strong buying interest is likely to persist. The steep curve favors rotations into longer tenors, while short-term bonds may remain stable but offer limited upside. Global bond rallies and expectations of a rate cut by the Bangko Sentral ng Pilipinas (BSP) should continue to support demand for 7–10Y papers, with auction results and global risk sentiment key to near-term moves.
Top GS Picks
| Security | Yield to Maturity | Tenor (Years) | Maturity |
|---|---|---|---|
| FXTN 20-14 | 5.73% | 2.41 | 6-Sep-27 |
| FXTN 7-64 | 5.75% | 3.04 | 22-Apr-28 |
| RTB 5-18 | 5.80% | 3.9 | 28-Feb-29 |
| FXTN 7-70 | 5.93% | 5.3 | 27-Jul-30 |
| FXTN 10-69 | 6.08% | 7.44 | 15-Sep-32 |
Note: Rates are indicative and subject to refresh.
(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)