STRONG liquidity in the local market was shown during the auction under the tap facility of the Bureau of the Treasury (BTr) on Tuesday, as tenders for the seven-year Treasury bonds (T-bonds) were almost five times oversubscribed.
Based on the auction results under the tap facility, tenders for the government security were almost five times oversubscribed at P94.423 billion, more than the bids received—P66.917 billion—during the primary auction for the seven-year T-bonds earlier in the day.
This prompted the auction committee to fully award its P10-billion offering under the facility at the same coupon rate of 6.250 percent.
During the primary auction of the T-bonds, the BTr was able to award the full P20 billion on offer, as strong liquidity was seen in the market.
National Treasurer Rosalia V. de Leon explained that the demand for the seven-year debt paper may be attributed to the market’s expectations of inflation reverting downward, as the Bangko Sentral ng Pilipinas (BSP) earlier said it expects inflation to fall within the band of 2-4 percent this year.
The tap facility is only made available to the Treasury’s 10 market makers, namely, BDO Unibank Inc., Bank of the Philippine Islands, China Banking Corp., Citibank Philippines, Development Bank of the Philippines, First Metro Investment Corp., Land Bank of the Philippines, Metropolitan Bank and Trust Co., Rizal Commercial Banking Corp. and Security Bank Corp.