Lower yields prompt full award of re-issued Treasury bonds

MANILA  -Expectations of a tightening pause by the Bangko Sentral ng Pilipinas (BSP) pushed down the yield for long-dated debt securities, allowing the government to fully borrow the planned amount of P30 billion during Tuesday’s auction of Treasury bonds.

Auction results showed total tenders for the T-bonds amounted to P65.9 billion, 2.2 times bigger than the original size of the issuance.

That robust demand for the re-issued T-bonds with remaining life of nine years and nine months helped lower the borrowing costs for the government.

What also allowed the state to lock in cheaper rates was the growing expectation that easing inflation would convince the BSP to keep its key rate steady at its monetary policy meeting on Thursday, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said.

READ: PH inflation eased to 4.9% in Oct

“Thus, all these factors, including the stronger peso exchange rate recently, could support the view of a possible pause in local policy rates,” Ricafort said,

Data from the Bureau of the Treasury showed average yield for the re-issued T-bonds settled at 6.781 percent, lower than 6.954 percent seen in the last auction of comparable tenor three weeks ago.

However, that was a tad higher than the 6.74 percent quoted for the same tenor at the secondary market.

The Marcos administration plans to borrow P225 billion from domestic lenders in November. Of that amount, P75 billion will be raised via T-bills sale while P150 billion will come from the sale of Treasury bonds.

Tuesday’s auction brought the amount of T-bonds sold in November at P120 billion.