philippine-bonds-steady-as-creditcrunch-fears-allayed

Philippine bonds steady as credit-crunch fears allayed

Despite unfavourable fiscal news released in the countryÆs budget report, Philippine bonds hold steady following BernankeÆs address to the US Congress.
July 19, 2007
News yesterday that the fiscal deficit in the Philippines is up by one-third had little impact on the countryÆs sovereign bond spreads. Instead, they reacted to US Federal Reserve chairman Ben BernankeÆs mid-week address to Congress.

BernankeÆs speech allayed some fears of an imminent credit crunch as a result of US subprime troubles, causing Philippine five-year CDS to move in by 3bp, and sovereign bonds to remain steady.

This occurred despite the Philippine budget figures showing a deficit increase in the first half of the year to Ps41 billion - 30% above the countyÆs target - and a drop in government expenditure of 4% below the first-half target.

ôThe market is purely trading on subprime...
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