T-bond rates seen going down

Interest rates on domestic treasury bonds are expected to fall this week as the anti-crisis measures announced last week by eurozone officials are seen to increase investor appetite for emerging market securities, including those from the Philippines.

In the latest issue of its “Daily Market Edge,” Security Bank said yields on T-bonds of various maturities might decline this week as a consequence of the positive investor sentiment created by the latest developments in the eurozone.

“We still see rates to remain range-bound with a downward bias with European governments coming to a resolution (to address the crisis in the eurozone),” Security Bank said.

The 10- and 20-year bonds, which dominated fixed-income securities trading last week, closed in the secondary market at 5.68 percent and 6.8325 percent, respectively. Total volume of bonds traded in the secondary market last week amounted to P38 billion.

European policymakers finally agreed last week on a set of measures to resolve the crisis in the eurozone. The agreement calmed financial markets worldwide after having manifested volatility since September amid the prolonged crisis in the zone.

One of the key measures agreed upon was the move to let holders of Greece’s bonds, led by banks, to absorb a 5-percent loss. This is meant to avert insolvency for debt-ridden Greece.

Another is the commitment of the International Monetary Fund and the European Central Bank to increase assistance to affected countries in the region. The latter has agreed to purchase more securities in the secondary market to help inject liquidity.

Italy, which is likewise suffering from a burgeoning debt, has vowed to accelerate its debt reduction to appease concerns over the fiscal situation in eurozone member-states.

Financial markets globally took the developments in the eurozone favorably, as foreign investments in emerging market securities recovered. Consequently, the currencies of emerging markets appreciated.