The Bureau of the Treasury (BTr) fully awarded its reissued treasury bonds during yesterday’s auction, which saw sustained robust demand for the government securities.
The auction was 3.3 times oversubscribed, with total tenders reaching P98.6 billion, which an analyst said indicated still “ample volume of liquidity in the system.”
The BTr said in a statement it raised the full program to P30 billion, bringing to P184.7 billion the total outstanding volume for the series.
The BTr said that the bonds, with a remaining term of five years and five months, fetched an average yield of 5.968 percent.
The yield was lower than the prevailing secondary market rate of 5.988 percent and the average rate of 6.06 percent when the bonds were last reissued.
Analyzing the auction results, John Paolo Rivera, Philippine Institute for Development Studies senior research fellow, told Malaya Business Insight that with inflation gradually easing and the Bangko Sentral ng Pilipinas expected to consider policy rate cuts later this year, investors were taking positions in medium-term securities to lock in relatively higher yields ahead of a rate decline.
“Also, the US Fed’s cautious stance on rate cuts has led to some stability in global yields. Investors may see PH government bonds as attractive, especially with their relatively favorable risk-adjusted returns,” Rivera said.
Rivera said the high bid volume suggests ample liquidity in the system, with banks and institutional investors seeking safe-haven assets amid lingering global uncertainties.
“While the awarded yield of 5.968 percent was slightly below secondary market levels, it still offers a decent spread compared to shorter-duration securities, making it an attractive investment for those looking to extend duration,” Rivera said.
“With the government’s ongoing borrowing program and the need to manage debt costs efficiently, the full award at a competitive rate indicates that the BTr sees favorable market conditions for raising funds at this tenor,” he added.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, also cited the lower average auction yield, amid dovish signals recently from local monetary authorities, ahead of the latest inflation data that may be released today (February 5). He said that he expected the inflation rate to ease from 2.9 percent in December 2024.
“The initial implementation of the maximum suggested retail price of imported rice on January 20, 2025, and the declaration of a food security emergency on February 3 could all help further reduce local rice prices and support benign inflation. This would support/justify further local policy rate cuts that could match future Fed rate cuts,” Ricafort said.