November 03, 2006
Updated 08:32:42 (Mla time)
SHARE prices are expected to open higher amid bullish sentiment after Moody's Investors Service raised the sovereign credit outlook for the Philippines to stable from negative and the central bank loosened monetary policy by adopting tiered overnight borrowing rates, dealers said.
Moody's, seen as the most pessimistic among the major global credit rating agencies, removed its negative outlook for the Philippines nine months after Standard & Poor's and Fitch Ratings initiated the move, citing the government' improving fiscal performance, which has helped it reduce external borrowing.
Shortly before Moody's announced its decision late Thursday night, the central bank reintroduced the tier scheme for its key overnight borrowing rate, last implemented in 2003, in a move seen as a prelude to an interest rate cut.
Under the tier scheme, the applicable rates for banks' overnight placements with the central bank are 7.50 percent for the first P5.0 billion; 5.5 percent for the next P5.0 billion, and 3.5 percent for the amount in excess of the first P10 billion.
The overnight lending rate stays at 9.75 percent.
Before the tier scheme was adopted, the central bank offered a single rate of 7.50 percent for all overnight placements by banks. That rate has been unchanged since October last year.
The announcements from Moody's and the central bank on Thursday came after Philippine financial markets had closed.
The 30-company composite index ended 13.28 points or 0.49 percent higher at 2,721.78, extending its rise for the 10th straight session. It was the index's best finish since July 7, 1999.
In the currency market, the peso settled at 49.71 against the US dollar, its strongest close since May 21, 2002.
"It seems that the bulls are unstoppable given these twin developments," First Grade Holdings Inc managing director Astro del Castillo said.
"We've been expecting a technical pullback for the equities market since last Monday but the flow of good news hasn't stopped."
http://services.inq7.net/express/06/11/03/html_output/xmlhtml/20061103-30334-xml.html
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