About a dozen officials quit last week on the President’s refusal to resign amid allegations that she may have fixed last year’s vote. Three-year bonds are set for their biggest weekly rally since May 2003 on optimism the new members will help the nation improve finances and raise credit ratings.
"The appointments seem to be very good choices," said Jonathan Ravelas, a strategist at Banco de Oro. "Tensions have eased compared to last Friday when everybody was expecting the President would succumb to pressure to resign, and that is helping bond prices recover.’’
The yield on the three-year government bond fell 41 basis points, or 0.41 percentage point, to 10.33 percent, according to the Money Market Association of the Philippines. It was the biggest one-day drop since May 2003. Yields surged 81 basis points on July 8 following last week’s resignations. Yields may fall 25 to 50 basis points over the next two weeks, Ravelas said.
The price of the 10.375 percent bond due July 2008 rose 1.0166 to 100.1163 as of 1:19 p.m. in Manila.
President Arroyo named former bank executive Peter Favila as new Trade Secretary, and current economic planning Secretary Romulo Neri to be the new Budget Secretary. Bank executive and former congressman Gary Teves was hired as the new Finance Secretary on July 12.
Former Finance Secretary Cesar Purisima and nine other officials resigned on July 8, citing concerns over Arroyo’s "leadership and credibility."