The Bureau of the Treasury (BTr) said its treasury bonds auction generated strong investor demand on Tuesday, enabling the government to raise a total of P40 billion.
In a statement, the BTr said the auction for the reissued 10-year bonds, with a remaining term of nine years and 11 months, was 3.7 times oversubscribed, with total tenders reaching P109.5 billion.
The BTr initially raised the full program of P30 billion. However, it opted to raise an additional P10 billion through the tap facility window.
Under the tap facility, which takes place from 2 to 4 pm on the same day, the BTr can accommodate some of the tenders for the government securities.
The reissued IOUs fetched an average rate of 6.226 percent, lower than the previous rate of 6.286 percent.
The comparable Bloomberg Valuation (BVAL) Service rate for the 10-year tenor is 6.192 percent.
“Strong demand for the Treasury bonds, with the auction nearly four times oversubscribed, reflects improving investor sentiment toward long-term government securities amid expectations of stable inflation and a potential policy easing cycle later this year,” John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said.
“The slight dip in the average rate compared with the previous auction signals that market participants were beginning to price in a more accommodative interest rate environment, while still demanding a premium over the BVAL given lingering global uncertainties,” he added.
Rivera said the BSP’s decision to hold rates steady, coupled with signs that inflation remains manageable, is supporting confidence in peso-denominated assets.
“At the same time, investors may be locking in yields ahead of any future rate cuts,” Rivera said.
“If these macroeconomic conditions persist particularly with the Fed signaling a more dovish stance and inflation remaining within target, we can expect continued strong demand for long-term bonds in the coming auctions,” he added.
