Here is the latest yield curve for local currency bonds. I wished I had saved a picture of this from one year ago, becasue there is a big difference on the Philippine curve.
(click image for ADB’s current, enlarged page)
Anybody remember that Napocor floated P5 billion in five-year bonds last May? The yield at that time was 250 basis points above where it is today.
So, in my Davao Light electric bill, I’m paying a 30% premium over today’s market-based rates on that piece of Napocor’s cost of capital.
Of course, it could have worked out the other way too.
Just this past Thursday the Philippines floated its biggest ever single issue offering – $1.5 billion in dollar denominated bonds (see reference article).
But the Herald Tribune gets the headline wrong in this Bloomberg News article Friday entitled “Junk bonds get riskier across Asia.” The article itself shows that these bonds are currently perceived as less riskier than last year.