7-year treasury bond yield down to 4.93%

Yield on the seven-year treasury bond on Wednesday hit an average of 4.936 percent, down 8.1 basis points from the 5.017 percent posted in the auction last month for bonds of the same tenor.

Wednesday’s average was, however, higher than the 4.9 percent yield for done deals in the secondary market.

Investors tendered a total of P24.04 billion, or more than twice the volume on offer.

The Bureau of the Treasury raised P9 billion as planned from Wednesday’s auction.

Wednesday’s offer was a reissue of seven-year bonds that were first issued on August 18, which means that the bonds have six years and 11 months until maturity.

Finance Undersecretary Gil S. Beltran said Wednesday’s auction results were due largely to the liquidity in the domestic financial market.

Beltran said the other factors were the government’s stable finances and “a stable macroeconomy” despite lower-than-expected gross domestic growth rate of 3.4 percent in the second quarter.

Beltan said Malacañang was planning to spend P240 billion in the second half, which is expected to help push growth faster considering that the low spending in the first semester pushed down economic expansion.

“The full-year target growth range of 5 percent to 6 percent is still achievable, although we have a fighting target range of 7 percent to 8 percent,” Beltran said.

Finance Secretary Cesar V. Purisima said in a statement that Malacañang was expecting the second-half economic performance to be much better than the first half as government spending picked up and private sector investments remained robust.

“The Business Expectations Survey by the Bangko Sentral ng Pilipinas showed improved business sentiment in the third quarter,” Purisima said.

“The business confidence index rose to 34.1 percent from 31.8 percent for the second quarter on the back of more robust demand, sound macroeconomic fundamentals, confidence in government, and expected fast tracking of government projects,” the finance chief added.