Yield of 10-year treasury bonds eases to 5.485%

Yield on the 10-year treasury bonds on Tuesday slid to an average 5.485 percent, 41.1 basis points lower than the 5.896 percent for the most recent issue of the same tenor in the primary market.

Tuesday’s average was also 6.47 basis points lower than the 5.5497 percent for done deals in the secondary market.

Investors tendered a total of P41.79 billion or more than four times the volume on offer.

The Bureau of the Treasury raised P9 billion as planned from Tuesday’s issue.

Tuesday’s offer was a reissue of 10-year bonds that were first sold last April 28, which means that the bonds have nine years and seven months until maturity.

National Treasurer Roberto B. Tan said Tuesday’s auction results were due to continuing liquidity in the domestic financial market.

Tan said the excess cash in the market was partly due to the increase in fund inflows from abroad, which pushed the country’s gross international reserves to an all-time high of $75.56 billion as of end-August.

He said this market situation “was reinforced by the neutral policy stance of the Bangko Sentral ng Pilipinas,” which decided last week to keep its overnight borrowing rate at 4.5 percent and overnight lending rate at 6.5 percent.

“Also, consumer price expectations are favorable, indicating a manageable inflation environment,” Tan added.

Based on 2000 prices, inflation in August eased to 4.3 percent, well within monetary authorities’ target range of 3 to 5 percent for the full-year average.

Last week, BSP Governor Amando M. Tetangco Jr. said the latest inflation numbers confirmed the central bank’s assessment that the inflationary pressures have moderated and that inflation was now going to be within the target range.