T-bond rates rise on talk of rate cut before yearend

With another interest rate cut before yearend declared possible by the Bangko Sentral ng Pilipinas (BSP), T-bond rates rose on Tuesday, Nov. 26, such that the Bureau of the Treasury only partially awarded the reissued 20-year IOUs it offered.

As the Treasury capped bid rates at 5.4 percent, it sold P12.271 billion out of the P20-billion offering at an average of 5.341 percent.

Tenders reached P28.071 billion.

To date, the treasury bonds maturing on Jan. 24, 2039 had an outstanding volume of P83.7 billion.

Deputy Treasurer Sharon P. Almanza told reporters after the auction that investors “opted to stay on the short given uncertainty on [interest] rates.”

Almanza noted that last Monday, Governor Benjamin E. Diokno said the BSP may still cut interest rates when its Monetary Board tackles the monetary policy stance on Dec. 12.

“But it will be data-driven, so depending on what the data will show in December there’s still a possible cut,” Almanza said, citing reports quoting Diokno.

Investors were also on a watch-and-see given external developments such as the ongoing US-China trade war, Almanza added.

The Monetary Board kept the policy rate at 4 percent last Nov. 14 amid easing inflation and slower growth at the start of the year.

So far this year, the BSP cut key rates by a cumulative 75 basis points (bps).

Prior to Monday, Diokno had said the BSP was already done with interest rate cuts.

Edited by TSB