Reissued T-bonds fetch lower rates

MANILA, Philippines — Rates fetched by reissued seven-year Treasury bonds (T-bonds) plunged yesterday amid expectations of monetary policy easing and ample liquidity in the financial system, according to the Bureau of the Treasury.

During yesterday’s auction, securities with remaining life span of six years and six months fetched an average rate of 4.845 percent, prompting the BTr to fully award the P20 billion offering.

Treasury records showed this rate is 89.8 basis points lower than the 5.743 percent yield recorded during the same debt papers’ previous auction last May 15, 2019, as well as the secondary market rate for seven-year bonds, which was recorded at 4.966 percent before the auction closed.

Total tenders reached P74.94 billion, more than 3.5 times higher than the P20 billion offer size.

According to National Treasurer Rosalia De Leon, yesterday’s auction saw a “one-liner” result, meaning all GSEDs offered the same rate for the securities.

“It’s a one-liner for the auction,” De Leon told reporters in an interview. “If you noticed in the auction, we only had one line, the 4.845 (percent), instead of having an array (of offers). So it’s like everyone converged at that rate.”

De Leon said the significant decline in the rates could be attributed to expectations of monetary policy easing from both the Bangko Sentral ng Pilipinas (BSP) and US Federal Reserve, as well as ample liquidity in the domestic market.

“We expected the rates would be coming down given the recent developments. We heard about the pronouncements from both Powell and Governor Diokno that the cut in policy rates is on the table,” De Leon said, referring to US Fed chairman Jerome Powell and BSP Governor Benjamin Diokno.

Just recently, Diokno said the BSP has more room for monetary easing this quarter amid the country’s easing inflation and the expected move of the US Fed to cut its own key rate.