Yield on 10-yr T-bond up 5.42%By Ronnel W. Domingo
Philippine Daily Inquirer
The yield on the 10-year treasury bond Tuesday jumped to an average of 5.42 percent, 26.1 basis points higher than the 5.159 percent for the most recent float of the same tenor awarded in March.
Tuesday’s average was also seven basis points higher than the 5.35 percent for the corresponding done deals in the secondary market.
The offer was a reissue of securities that were first floated on March 10, which means the bonds have nine years and six months until maturity.
Investors tendered a total of P14.71 billion or less than twice the volume on offer. The Bureau of the Treasury (BTr) raised P9 billion as planned.
Finance Undersecretary Gil S. Beltran, who chaired the auction committee in lieu of National Treasurer Roberto B. Tan, said in an interview that the government had considered a partial award of yesterday’s issue.
“But the difference was (very small at) just about five basis points so we decided on a full award,” Beltran said.
“We wanted to reflect in the resulting rates the numbers that are prevailing in the market,” he added.
In April, Singapore-based DBS Group said in a research note that the Philippine liquidity conditions “have tightened somewhat” since September as shown with the upward pressure on interbank rates.
Even then, DBS said it believed that liquidity should remain good enough to allow government bond yields to remain low.
“We maintain the view that market interest rates on average are likely to be lower in 2012 than they were in 2011,” the group said.
DBS noted that yield on 10-year bonds, which averaged at 6.46 percent in 2011 is not likely to reach an average of 6 percent this year.
“It is liquidity conditions that will decide where yields will go in 2012 and we think upward pressure from tighter liquidity is temporary, given the accommodative monetary policy stance of [the Bangko Sentral ng Pilipinas],” it added.
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