20-year T-bond rate falls by 155 basis points

MANILA, Philippines — The rate for the reissued 20-year Treasury bonds sold Tuesday fell by 155 basis points to 5.17 percent amid strong demand, thanks to easing inflation and more liquidity in the market.

The Bureau of the Treasury sold all of the P20 billion in IOUs maturing on Jan. 24, 2029, which it first offered in January.

Bids reached P27.3 billion, making the auction oversubscribed.

To date, the total outstanding volume for these 20-year IOUs amounted P51.5 billion, the Treasury said in a statement.

Deputy Treasurer Erwin D. Sta. Ana told reporters after the auction that Tuesday’s sale was “a very good result for us.”

“It just shows the trend in declining interest rates. Of course, as already mentioned by [National Treasurer Rosalia V. de Leon after the T-bills auction last Monday], the factors — we all know the RRR [reserve requirement ratio] cut, possible rate cut of the BSP [Bangko Sentral ng Pilipinas], the trend in US treasuries… So again, inflation. These are possibly the reasons why we got this result,” Sta. Ana said.

“And there’s a good appetite for the long end,” he added.

Moving forward, Sta. Ana said the Treasury expects robust demand for government securities to continue.

“There seems to be additional liquidity in the system because of the RRR cut, so we see that could be translated into bids in auctions. Although for this auction, we can see that it’s just a little over the offer size. But it’s still a good indication considering that you’re auctioning off a 20-year,” according to Sta. Ana. (Editor: Eden Estopace)