Philippine and Saudi sovereign bonds offer the best premiums
We see better value for these two bonds compared with others.
By Metrobank
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The newly issued KSAs (bonds issued by the Kingdom of Saudi Arabia) and ROPs (bonds issued by the Republic of the Philippines) were issued at a premium over similar-tenor bonds.
We prefer the new 10-year papers as these represent good levels to lock in for the long term while potentially being a source of capital gains should US dollar yields go lower in the medium to long term. KSAs, in particular, offer a better relative value as they have a similar yield to ROPs but a higher credit rating than ROPs.
Issuer: Republic of the Philippines
Credit Rating: Baa2 / BBB+ / BBB
Bond: ROP 5.609% 33
Indicative Price: 98.125
Indicative Yield-to-Maturity (YTM): 5.851% (as of October 24, 2022)
Issuer: Kingdom of Saudi Arabia
Credit Rating: A1 / A- / A
Bond: KSA 32New
Indicative Price: 98.250
Indicative Yield-to-Maturity (YTM): 5.732% (as of October 24, 2022)
The new 10-year KSA (Kingdom of Saudi Arabia) and ROP (Republic of the Philippines) US dollar