7-yr treasury bond yield up to 5.9%

Yield on the seven-year treasury bond rose Tuesday to an average of 5.907 percent, 3.4 basis points higher than the 5.8732 percent for done deals in the secondary market.

Also, Tuesday’s average was 2.2 basis points higher than the 5.885 percent for the most recent seven-year issue that was awarded in the primary market last month.

Investors tendered a total of P31.652 billion, or more than three times the volume offered.

The Bureau of the Treasury raised P9 billion as planned from Tuesday’s issue.

Tuesday’s offer was a reissue of the 10-year bonds that were first issued in Jan. 31, 2008, which means that the bonds have six years and seven months more until maturity.

National Treasurer Roberto B. Tan said Tuesday’s results showed that investors were getting “more comfortable” of market conditions, especially considering the volume of tenders they forwarded.

“I think the market is now having a view of the future on the positive side,” Tan said.

He said that although new rates were higher than both previous primary market levels and current secondary market levels, the difference were insignificant.

Tan heralds investor confidence as market watchers, like Standard Chartered Bank, said the Bangko Sentral ng Pilipinas was expected to raise its policy rates by 25 basis points next week.

The increase is expected to come amid an anticipated peaking of the inflation rate in the next few months, the bank said.

This would bring the BSP’s overnight borrowing rate to 4.75 percent and the lending rate to 6.75 percent.