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Peso GS Weekly: Jumbo bond sale and rate cuts
Local bonds face mixed sentiment on global risks, profit-taking, jumbo bond sale, and rate cut view.
By Metrobank Local Currency Trading Department and Janssen Roman
What happened last week
The local bond market started the week steadily after global rates dropped, with some initial buying. However, profit-taking soon took over as many investors were looking to sell their bonds. Yields on bonds from 4 to 20 years rose by 6–13 basis points (bps). The 5-year bond, FXTN 7-70, underperformed, climbing to 5.925% (+12.5 bps), while the 10-year FXTN 10-72 rose to 6.115% (+9.5 bps). The 3-month T-bill auction saw weak demand, while the 6-month and 1-year bills performed slightly better.
By midweek, market sentiment weakened as US yields dropped and trade tensions grew. The 7-year FXTN 20-17 auction received less interest, with its average rate coming in at 5.986%. Yields rose by 1.5–8 bps across the board, with FXTN 20-17 ending at 6.00%. Some players sold longer-term bonds, like the 20-year FXTN 20-27, which rose to 6.409%. Investors were advised to take profits ahead of more supply.
The week wrapped up with the Bangko Sentral ng Pilipinas cutting rates by 25 basis points to 5.50%. However, this move was already expected, so yields rose anyway. Short-term bonds saw some buying, but longer-term bonds like RTB 5-18, 10-69, and 10-72 all rose by 4.5 to 8 bps. With next week’s 10-year bond issuance coming up, investors are encouraged to start buying bonds with longer durations as prices are expected to range from 6.250% to 6.500%.
BVAL Rates
| Tenor | 11-Apr-25 | 4-Apr-25 | Change |
|---|---|---|---|
| 1M | 5.09% | 5.13% | -0.04% |
| 3M | 5.37% | 5.35% | 0.02% |
| 6M | 5.62% | 5.68% | -0.06% |
| 1Y | 5.78% | 5.77% | 0.01% |
| 2Y | 5.75% | 5.73% | 0.02% |
| 3Y | 5.81% | 5.74% | 0.07% |
| 4Y | 5.89% | 5.78% | 0.11% |
| 5Y | 5.98% | 5.83% | 0.15% |
| 7Y | 6.16% | 5.95% | 0.21% |
| 10Y | 6.26% | 6.10% | 0.16% |
| 20Y | 6.32% | 6.32% | 0.00% |
| 25Y | 6.32% | 6.32% | 0.00% |
What we can expect
The market will focus on this week’s 10-year jumbo bond issuance, with strong demand expected despite recent volatility. Investors may seize opportunities to lock in attractive yields as supply picks up. Global developments and US bond market movements will remain key drivers, while shorter-term bonds may offer more flexibility as conditions evolve.
Top GS Picks
| Security | Yield to Maturity | Tenor (Years) | Maturity |
|---|---|---|---|
| FXTN 20-14 | 5.72% | 2.41 | 6-Sep-27 |
| FXTN 7-64 | 5.76% | 3.04 | 22-Apr-28 |
| RTB 5-18 | 5.95% | 3.9 | 28-Feb-29 |
| FXTN 7-70 | 6.03% | 5.3 | 27-Jul-30 |
| FXTN 10-69 | 6.20% | 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.)