7-year T-bonds fetch 3.501%

MANILA, Philippines–The Bureau of the Treasury auctioned off Tuesday P25 billion worth of seven-year debt paper at 3.501 percent—lower than the previous rate as it reflected the slower pace of increase in the prices of commodities.

During the Treasury’s last auction for 2014, investors tendered a total of P61.05 billion, making the treasury bonds oversubscribed by 144.2 percent.

The Treasury made a full award of the reissued long-term IOUs maturing on March 20, 2021. The annual rate was 24.1 basis points lower than the 3.742 percent during the previous auction.

Finance Undersecretary Gil S. Beltran, who chaired the auction, attributed the lower rate to tempered inflation.

“As long as we keep the inflation down, then the rates will continue to be very stable, almost not moving,” Beltran told reporters.

Last week, the Philippine Statistics Authority reported that the inflation rate eased to 3.7 percent in November. The last three months saw inflation on a downtrend from 4.4 percent in September and 4.3 percent last October.

For 2015, the borrowing plan recently approved by the central bank’s policy-making Monetary Board would focus on replacing old debt paper with new ones on better terms.

An Inquirer report published yesterday quoted Monetary Board member Felipe M. Medalla as saying that the Bangko Sentral ng Pilipinas has already given its go-ahead for the issuance of about $1 billion worth of Republic of the Philippines (ROP) bonds by the first quarter of next year.

The International Financing Review earlier reported that the Philippine government had hired Deutsche Bank and HSBC as joint global coordinators for an offshore ROP issuance.