Government sells P8.5 billion worth of 20-year Treasury bonds

MANILA, Philippines - The Bureau of the Treasury (BTr) sold  yesterday P8.5 billion worth of 20-year Treasury  bonds (T-bonds) and is eyeing to sell another P8.5 billion today through its over-the- counter facility on the back of strong demand from investors, National Treasurer Roberto Tan said.

The results of yesterday’s auction, the first under the administration of President Aquino,  reflected investors’ optimism on the new government and on improving economic  indicators, Tan said. Investors tendered a total of P20.919 billion, more than double the  P8.5 billion offered by the government.

The T-bonds fetched an average rate of 8.521 percent or 22.9 basis points lower  than the previous average of 8.729 percent.

Bids ranged from 8.496 percent to 8.575 percent. Because of the strong demand, Tan said the auction panel decided to open the tap facility or its over-the-counter window for  investors who still want to buy the debt paper.

The Treasury will open the window for another P8.5-billion debt sale from 9 a.m. to 3  p.m. today.

Tan said the news on the lower-thanexpected inflation rate in June also boosted investors’  optimism.

According to the National Statistics Office (NSO), annual inflation rate in June fell to a  seven-month low at 3.9 percent, the lowest rate since November. This boosted  expectations that the central bank will keep interest rates steady at its policy meeting next week.

“Slower annual price increases were seen in all the commodity groups except in the food,  beverage and tobacco index,” the NSO said.

BSP Governor Amando Tetangco Jr. said that given the latest inflation data, the Bangko  Sentral ng Pilipinas has the flexibility when it reviews the stance of monetary policy next week. Analysts believe that monetary authorities may keep rates steady, as inflation

is likely to remain manageable in the coming months. Commodity and food prices have started to stabilize.

During its last rate-setting meeting last month, the BSP held its policy rate at a record low of four percent. The last change in the rate was a 25 basis point cut in July 2009 as  monetary authorities tried to cushion the economy from the impact of the global financial  turmoil.

Earlier, the BSP slashed its 2010 inflation forecast to 4.7 percent from 5.1 percent due to taming food and energy prices.