National Treasury raises P9B in Tuesday auction as planned

Yield on the 25-year treasury bond slid Tuesday to 7.131 percent, or 49.4 basis points lower than the 7.625 percent set in an auction held last month.

The rate set in Tuesday’s auction was also 7.35 basis points lower than the 7.2045 percent on done deals in the secondary market.

Investors tendered a total of P26.605 billion, much more than the P9 billion offered.

The Bureau of the Treasury raised P9 billion as planned from the auction Tuesday.

National Treasurer Roberto B. Tan said in an interview that the results were “pleasing,” adding that investor interest might be a spillover from the recent issuance of 10-year and 15-year retail T-bonds.

Tan said proceeds from the outstanding 25-year T-bonds were estimated at about P200 billion, which helped in ensuring strong government finances.

Since last month, “(we have already raised) P23 billion from 25-year T-bonds,” he said. “It’s a good volume already, and the rates are very welcome.”

Asked whether rates are expected to decline in the coming month given that the Bangko Sentral ng Pilipinas lowered its inflation forecast for next year, Tan said he thought the BSP’s move “had an influence on investor sentiment.”

According to the Singapore-based DBS Group, the BSP is “showing readiness” to ease monetary policy in the coming months amid a weakening push for growth from international trade.

In particular, DBS said the move of the BSP to cut its 2012 inflation forecast to 3 percent from 3.4 percent was a sign that the central bank might, “if needed,” follow the Indonesian central bank’s example.

Indonesia’s monetary authorities cut earlier this month its policy rate by 25 basis points to a record low 6.5 percent. The move, they said, was in view of expectations of a weaker global economy that would affect the country’s exports.

The BSP last week maintained its overnight borrowing rate at 4.5 percent.

“The external sector is not going to be able to provide a lift to the Philippine economy in the short term,” DBS said. “Therefore, it was not surprising that the central bank left the benchmark policy rate unchanged.”