T-bond yields climbs

INQUIRER FILE PHOTO

Rates on long-dated debt securities climbed during Tuesday’s sale of Treasury bonds (T-bonds) as investors sought to lock-in longer maturities before anticipated rate cuts later this year as supported by softer consumer prices.

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 four years and seven months.

READ: T-bond rates rises: Gov’t raises P30 billion

The auction showed rates went up amid decent demand for the issuance, which attracted total bids amounting to P69.08 billion, exceeding the size of original offering by 2.3 times.

The debt securities yielded an average rate of 6.058 percent, more expensive compared to the 6.107 from the previous issuance on Aug. 7. This was also higher than the 6.050 percent seen in the secondary market as of Sept. 9.

“The 5-year T-bond was slightly higher after the latest inflation eased to a seven-month low of 3.3 percent in August, reverted back to the Bangko Sentral ng Pilipinas (BSP) 2 to 4 percent inflation target range, hereby could justify further local policy rate cuts in the coming months that could match future Fed rate cuts,” Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said.

Ricafort said that investors are still locking in yields in anticipation of more policy easing this year.

August inflation slowed to 3.3 percent from 4.4 percent in the previous month and from 5.3 percent a year ago, mainly due to a more gradual hike in food and transport costs.

Meanwhile, the BSP earlier said it would maintain a “measured approach” to ensuring price stability, following its decision to lower the policy rate by 25 basis points to 6.25 percent during the Monetary Board’s August meeting.

The government plans to raise P195 billion from the domestic market this month, of which P80 billion will come from Treasury bills and P115 billion via T-bonds.