20-year T-bond yield up

The yield on 20-year treasury bonds rose by 11.9 basis points to an average of 6.025 percent as investors pushed for a double-digit basis point increase despite an apparently calm market.

Tuesday’s yield was 14.9 basis points higher than the 5.875-percent coupon set during the February auction of debt notes of the same tenor.

Also, Tuesday’s average rate was 9.19 basis points higher than the corresponding 5.9331 percent for done deals in the secondary market.

Investors tendered a total of P14.098 billion, which was more than the government’s offer of P9 billion. Even then, the government raised only P6.65 billion from the auction, or just over two-thirds of the offer.

National Treasurer Roberto B. Tan said in an interview that the resulting average was “well within the normal rates” considered by the auction committee.

“We were just following prevailing rates in the secondary market,” Tan said, explaining that the committee opted for a partial award because there was a significant volume of reasonable bids.

Asked to describe how the market behaved on Tuesday, the Treasury chief said that there remains a preference for longer tenors.

“While there were persistent concerns about the effects of external developments on the local financial market, the good news from Greece calmed the market a bit and generated more confidence among investors,” Tan said, referring to the election in Greece, the results of which could ease the fiscal crisis in the beleaguered eurozone member.

In a statement Finance Secretary Cesar V. Purisima said that what happened in Greece was a welcome development for the world economy, although more would need to be done to revive the European economy.

“Back here at home, we will continue to monitor developments, not only in the eurozone, but also in the United States, China and the whole global economy, to be able to respond correctly and properly to the challenges that may pose risk to the Philippine economy,” Purisima said.

“The Philippines has consistently shown its resiliency amid the turmoil—as proven by the 6.4-percent growth we posted on the first quarter of the year—and we must remain vigilant to be able to sustain this,” he added.