MANILA, Philippines -- Debt yields are expected to stay flat for the rest of the week unless the September budget deficit data comes in higher than expected, money market dealers said Monday.
Banks continue to favor short-term instruments, either government debt or the central bank's special deposit account facility, with market volatility discouraging investors from loading up on longer-dated securities, they said.
Done deals for the three month paper were steady at 6.25 percent on Monday from Friday, according to reference rates posted by the Philippine Dealing System.
The government's fiscal data, to be announced at 0630 GMT Monday, was not expected to jolt the market unless it showed the government incurred an over P10 billion ($207 million) deficit in September after a surplus in August, the dealers said.
"The budget data may be a non-event unless if it's a really big figure," said a dealer from a local bank." A P5.0-billion deficit would be acceptable, but a double-digit figure may push yields up by 10 basis points."
Manila had a budget surplus of P1.7 billion in August which brought the January to August budget shortfall to P31.6 billion, below the full-year deficit target of P75 billion.
The government has abandoned its goal of balancing the budget this year in order to spend more on infrastructure and social services to try and shield the economy from a global downturn.
The government plans to sell P6.0 billion worth of 10 year bonds at a regular auction on Tuesday.
One trader said the Bureau of Treasury may not have enough flexibility to reject bids at the 10-year bond auction because it needs to build up its cash reserves to settle maturities in the coming months.
The government sold 10-year bonds at 7.227 percent at the March 25 auction.
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