The Bureau of the Treasury (BTr) fully awarded bids for the reissued seven-year Treasury bonds at the auction on Tuesday, marked by lower rates and healthy investor demand.
With a remaining term of five years and one month, the T-bonds yielded an average of 5.887 percent, which is lower than the five-year benchmark of 5.898 percent and the average rate of 5.943 percent when they were last reissued in April.
The auction was nearly twice oversubscribed, with total tenders reaching P59.9 billion.
The BTr decided to raise the full program of P30 billion, thus bringing the total outstanding volume for the series to P321.7 billion.
However, high demand for the IOUs prompted the BTr to accept further subscription for the now five-year paper 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 demand for the government securities.
The BTr has set a P5 billion program for the current tap facility offer.
“Expectations of stable to lower inflation rate fuel lower rates,” Jonathan Ravelas, senior adviser at professional service firm Reyes Tacandong & Co., said.
According to the mean average of estimates made by six economists polled by Malaya Business Insight on Sunday, inflation is likely to show a further slowdown to 1.3 percent in May.
The Philippine Statistics Authority (PSA) is scheduled to hold a press conference on May’s inflation on Thursday, June 5.
The PSA previously reported that inflation slowed to 1.4 percent in April from 1.8 percent in March, the lowest since November 2019, or 5 ½ years ago, when inflation sagged to a low 1.2 percent.
As the prices of key food items, especially rice, waned, poll respondents said inflation should show a deceleration again when the government releases its official data later this week.
“The 5-year Treasury bond average auction yield was slightly lower than the comparable 5-year BVAL (Bloomberg Valuation Service) yield (and) also lower than the 5.943 percent in the previous 5-year Treasury bond auction a little over a month ago or on April 29; ahead of the latest local inflation data on June 5, 2025 that is expected to ease and remain benign; (and) after US Treasury bond yields slightly corrected lower recently,” Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said.
