T-bond rate rises on possible rate cut

With another interest rate cut before yearend declared “possible” by the Bangko Sentral ng Pilipinas (BSP), treasury bond rates rose on Tuesday, prompting the Bureau of the Treasury to only partially award the reissued 20-year IOUs it offered.

As the Treasury capped bid rates at 5.4 percent, it sold P12.27 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 in [interest] rates.”
Almanza noted that last Monday, BSP Governor Benjamin E. Diokno said monetary authorities might still cut interest rates when the policy-making Monetary Board meets 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.

Investors were also on 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 has 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.