MANILA, Philippines -- (UPDATED) The yield on seven-year treasury bonds dropped by more than a percentage point to an average of 5.72 percent, on Tuesday, as the market for government securities continued to be "very liquid."

Results from Tuesday?s auction showed a decrease of 108.9 basis points from 6.809 percent for the seven-year paper issued last July.

National Treasurer Roberto B. Tan said in an interview that there was ?a lot of cash running after government securities.?

Tan said buyers? appetite was building up for P38.76 billion worth of government debts maturing this month.

?This is demandable debt and the government is poised to pay, making the domestic market even more liquid. Thus, the strong demand,? Tan explained.

The Bureau of the Treasury raised P8.5 billion as planned from Tuesday?s auction, with the resulting average rate settling 16.5 basis points lower than the 5.885 percent prevailing in the secondary market.

Investors tendered a total of P23.57 billion, almost thrice as much as the volume offered.

When asked if the Treasury would open a tap facility to accommodate over-the-counter transactions, Tan said this was not necessary as the government had sufficient cash already.

Two weeks ago, the Treasury canceled the auction for P8.5 billion worth of five-year bonds amid the then ongoing public offering of retail treasury bonds (RTBs).

The government was able to raise P97.5 billion from RTBs with tenors of five, seven and 10 years, including the P25 billion raised from a price-setting auction.

The coupon rate for the five-year paper was pegged at 5.875 percent while those for the seven-year and 10-year papers settled at 6.625 percent and 7.25 percent, respectively.

Intially, the Treasury issued P10 billion each for the five- and seven-year issues and P5 billion for the 10-year paper.

The latest float made up the so-called 12th tranche of the RTB program that started in 2001. Until the 11th outing in September last year, the government raised a total of P550 billion in RTBs.

The 12th RTB outing was also meant to replenish supply with the maturity of some P75 billion worth of such debt paper in late August and this week.