The yield on the 10-year treasury bonds eased Tuesday to an average 5.169 percent, 58.1 basis points lower than the 5.75-percent coupon set during the previous issue that was awarded last November.
Also, Tuesday’s average was 1.6 basis points lower than the 5.185 percent fetched by done deals in the secondary market.
Investors tendered a total of P28.25 billion, or more than three times the volume on offer. The Bureau of the Treasury raised P9 billion as planned from Tuesday’s issue.
As Tuesday’s offer was a re-issue of debt paper first floated two months ago, it has a remaining life of nine years and 10 months.
National Treasurer Roberto B. Tan said in an interview that the market “remains to be very liquid, with the policy action being anticipated and reflected on the bids, [giving the government] a fairly good price for the issuance.”
Tan was referring to expectations that monetary authorities would ease key interest rates by 25 basis points as early as Thursday when the Monetary Board meets.
He added that the credit-rating downgrade of several countries in the European Union might drive international capital to countries like the Philippines.
“Of course there’s going to be capital movement to what’s supposed as safer haven like the United States and probably to emerging markets, which are perceived as good investment [destinations],” Tan said.
The Treasury chief cited reports about the equities market being bullish. With “this auction as well as other indicators, it seems there is a lot of inflow coming,” he added.
Last week, the Singapore-based DBS Group said an anticipated 25-basis-point cut in policy rates could come as early as this week.
The financial services firm said in a research note the Bangko Sentral ng Pilipinas might ease its overnight borrowing rate to 4.25 percent or change the reserve requirement for banks as government data showed a continued decline in exports, although inflation remained benign.