INQUIRER FILE PHOTO
Rates on long-dated debt securities increased during Tuesday’s sale of Treasury bonds (T-bonds) as market players aimed to secure longer-dated maturities before planned rate cuts later this year.
Auction results showed that the Bureau of the Treasury had made a full award of P30 billion in reissued T-bonds, which have a remaining life of three years and one day.
The auction showed rates went up amid decent demand for the issuance, which attracted total bids amounting to P49.4 billion, exceeding the size of original offering by 1.6 times.
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The debt securities yielded an average rate of 6.025 percent, more expensive compared to the 6.017 percent seen in the secondary market as of Sept. 3 and the 6.009 percent from the previous reissuance.
“The slightly higher rate is market players’ preference for longer dated maturities. Players look to lock in longer dated maturities with the Bangko Sentral ng Pilipinas (BSP) set to reduce rates further this year and next year,” Dino Angelo Aquino, vice-president and head of fixed income of Security Bank Corp., said.
Aquino also noted that the August inflation data this week won’t be seen as significant, as long as it stays within the central bank’s range.
“Market is expected to be range bound but levels remain supported on small pockets or correction as 2025 cuts have yet to be priced in,” Aquino said.
The BSP projected inflation last month to have settled between 3.2 and 4 percent, softer than the 4.4 percent recorded in July.
The Philippine Statistics Authority will release August inflation data on Thursday.
On Aug. 15, the BSP lowered its policy rate by 25 basis points (bps) to 6.25 percent. BSP Governor Eli M. Remolona, Jr. also said that they might reduce the rate by another 25 bps later this year.
For this month, the government is set to raise P195 billion from the domestic market, of which P80 billion is through Treasury bills and P115 billion will come from T-bonds.