The Bureau of the Treasury (BTr) fully awarded bids for the reissued seven-year treasury bonds auctioned yesterday amid healthy demand for the government IOUs.
In a statement, the BTr said the auction was 1.8 times oversubscribed, with total tenders reaching P53.4 billion.
The BTr raised the full program of P30 billion.
The bonds, which have a remaining term of six years and three months, yielded an average of 5.986 percent.
Bids ranged from 5.925 percent to 6.015 percent.
The average rate is lower than the Bloomberg Valuation Service rate of 5.9925 percent.
It is also better than the 6.143 percent rate in the previous seven-year treasury bond auction last March 11.
Michael Ricafort, Rizal Commercial Banking Corp.’s chief economist, said the yield eased after the recent decline in the comparable seven-year US Treasury yield to 3.5-month lows since Dec. 18, 2024, now at 3.98 percent.
Ricafort also cited the latest benign inflation data, which showed 1.8 percent in March 2025, which was below the Bangko Sentral ng Pilipinas (BSP) inflation target of 2 to 4 percent.
“That increases further the odds of a BSP rate cut soon, consistent with dovish signals reiterated by local monetary officials recently,” Ricafort said.
John Paolo Rivera, PIDS research fellow, viewed the strong demand for T-bonds as reflecting a positive shift in investor sentiment toward medium-term securities.
Rivera said, “There’s growing anticipation that the BSP could start easing by mid-to-late 2025, especially if inflation stays manageable.”
Investors are positioning ahead of that pivot by locking in higher yields now. He said that with March inflation softening, real returns on medium-tenor bonds look increasingly attractive.
Rivera said that despite still-elevated policy rates, institutional investors (banks, insurance firms, funds) continue to chase safe, longer-dated assets with decent returns.
“Overall, it reflects investor confidence in the inflation outlook and expectations of BSP easing later this year. The slightly lower yield than the benchmark suggests a growing appetite for medium-term securities as real returns become more attractive. Given this, the BTr is likely to lean more on longer-tenor issuances in the coming quarter while selectively tapping external markets if conditions remain favorable,” Rivera said.
