Yield Curve: a Study

Corporate Study about

Factors affecting the

Yield Curve and

Investment Decisions

Submitted by:

Siguenza, Kevin Loyd G.

Balingasa, Mirasol M.

Francisco, Jetty P.

Miral, Julius Emer D.

Ventura, Ma. Iris Angela T.

Submitted to:

Prof. Pabayos

I. Introduction

The financial market in the Philippines has been in a “rosy” state. It’s a good sign for the country’s economy, specifically the Philippines debt market. The proponents of the study have chosen matured or redeemed bonds of a Real Estate Corporations, namely Ayala Land Inc. and Filinvest Land Inc. According to CBRE Philippines, the leading real estate advisor in the Philippines, that real estate market in the Philippines is very positive.

Both firms belong to the Philippines Top Real Estate Developers accommodating most of the market here in the Philippines. The main focus of the study is to determine the risk that affects the decision of investors and to analyze the given variables of both firms. The given variable on the study are the yields that both bonds have from the date of issuance till’ the date of maturity. It will also emphasize the relationship between the rates of treasury bonds and corporate bonds that differ from each other, the importance of the differences between those bonds and what does it imply.

The purpose of the study is to inform us about how realistic treasury and corporate bonds relate to each other then how the relationship affects the decisions of investors. Investors look at the Yield Curve of the country’s government in order to determine whether it is wise to invest on the Treasury Securities or Corporate bonds on the country of issue. Giving emphasis on the importance of the risk that may also rise into an opportunity upon investing on a particular marketable security.

II. Background

Company Background – Ayala Land Inc.

Ayala Land is the real estate arm of Ayala Corporation. Ayala Land was spun-off by Ayala Corporation in 1988 to enhance management...