MANILA, Philippines—The yield on the 10-year treasury bonds inched up Tuesday to an average of 5.657 percent, or 17.2 basis points—higher than the 5.485 percent for the previous issue that was awarded last September.
Also, Tuesday’s average was 5.74 basis points less than the 5.7144 percent yield for done deals in the secondary market.
Investors tendered a total of P23.882 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 the first new issue of 10-year bonds following the float of retail T-bonds in October, including 10-year and 15-year debt notes for small investors.
Finance Undersecretary Gil S. Beltran, who chaired the auction committee in lieu of National Treasurer Roberto B. Tan, said in an interview that the auction results showed the local financial market to be “very stable.”
“There was almost minimal adjustment in the rate,” Beltran said. “We also see that 10 years is a very popular (length of) maturity—it is not too long, nor is it too short.”
Beltran said investors who bought 10-year T-bonds were mainly insurance companies, which preferred government securities with long tenors.
He said that during Tuesday’s bidding, investors were influenced by the low level of budget deficit which, as of the end of September, was pegged at about P53 billion, or just about one-sixth of the target for the full year.
“With that level of deficit, no volatility is coming from the fiscal front,” Beltran said. “Instability is coming from outside, such as the United States and the European Union, where there are debt problems.”
For the 10-year T-bond, the finance official said that there would be “a little uptick and downward adjustment every now and then.”
Yield, he added, could hover between 5.5 percent and 6.5 percent.
In October, First Metro Investment Corp. and the University of Asia and the Pacific said in a joint research that the yield on Philippine debt paper would not likely go up and could even go down in the remainder of 2011.
This is mainly due to the weak economies of the United States and in Europe, low growth in domestic output, as well as a benign inflation outlook, they explained.