Dec. 15 (Bloomberg) -- Philippine six-year bonds fell the most in two weeks and the peso dropped on concern an increase in U.S. Treasury yields will damp the allure of the nation’s higher-yielding assets. The notes snapped a four-day rally as 10-year Treasury yields rose to the highest level since May after the Federal Reserve refrained from expanding a $600 billion program of debt purchases. The Philippines’ benchmark interest rate of 4 percent gives the nation’s bonds a yield advantage over debt assets in the U.S., where overnight interbank loan rates range from zero to 0.25 percent. “The Philippines may have a hard time sustaining demand for its assets,” said Marcelo Ayes, senior vice-president for treasury at Rizal Commercial Banking Corp. in Manila. “Why will I get a risky asset when U.S. Treasuries have become attractive?” The yield on the 7 percent bond due January 2016 rose eight basis points, the most since Nov. 30, to 4.625 percent as of 12:14 p.m. in Manila, according to Tradition Financial Services. Ten-year Treasury yields jumped 20 basis points to 3.48 percent yesterday. The Philippine peso fell 0.3 percent to 43.93 per dollar, according to Tullett Prebon Plc. --Editors: Ven Ram, Simon Harvey To contact the reporter for this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net. To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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