MANILA, Philippines—Awash in cash, banks continued to swamp the auction for government securities, submitting P32.349 billion worth of bids for 10-year Treasury bonds.
But the government on Tuesday offered, and accepted, only P9 billion worth of debt paper.
The Bureau of the Treasury said it did not want to borrow more than what had been programmed.
The long-term bonds fetched a rate of 6.5 percent, up from the 6.125 percent registered in an auction for the same bonds held last Sept. 14.
According to the BTr, the latest rates for the bonds are consistent with existing secondary market rates.
“The market is becoming more comfortable with future inflation,” National Treasurer Roberto Tan told reporters after the bond auction on Tuesday.
He said fears of accelerated inflation had somewhat eased, and so there was less reason for banks to seek higher rates.
In the first quarter, inflation averaged at 4.1 percent, well within the full-year cap of between 3 and 5 percent.
Economists said inflationary pressures were indeed rising, spurred on by the increasing price of oil in the world market.
But these pressures may not lead to a breach in the government’s inflation cap, they added.
Finance officials also said improving revenue collection and fiscal performance of the government would encourage investors to buy more Treasury bonds.
The government posted a deficit of only P8.1 billion in the first two months of the year. This led to projections that the deficit for the entire first quarter would be way below the P112-billion ceiling set for the period.