THE Bureau of the Treasury (BTr) has awarded the full P20 billion on offer for reissued 10-year Treasury bonds (T-bonds) during its auction on Tuesday.
National Treasurer Rosalia V. de Leon told reporters that the auction committee decided to award the full P20 billion as liquidity is present in the system coming from the recent move of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) to cut by 25 basis points key interest rates last week.
“We expect that rates will be coming down given the pronouncements by the [Central Bank] Governor and of course the actions of the MB last Thursday which reduced policy rates by 25 basis points. And coming from the [BSP] Governor [Benjamin E. Diokno], they are also looking at possible RRR [reserve requirement ratio] cut in September or within the fourth quarter,” de Leon said.
Tenders for the reissued 10-year T-bond amounted to P65.216 billion, with the average annual rate posting a decline of 144.8 basis points to settle at 4.196 percent, which prompted the auction committee to award the P20-billion offering. The previous average annual rate for the security was at 5.644 percent which was awarded last May 28, 2019.
“On the domestic front, it’s really more driven by, we see, the increasing liquidity and lower rates. Eventually, they will again [cut the rate] so they are taking the opportunity right now to also lock in, particularly, for the 10 years,” she added.
Last week, Diokno announced the MB’s decision to cut the interest rate on the BSP’s overnight reverse repurchase facility by 25 basis points to 4.25 percent. The interest rates on the overnight deposit and lending facilities were slashed to 3.75 percent and 4.75 percent, respectively, on the back of the inflation downtrend as well as the tepid gross domestic product (GDP) growth in the April-to-June period this year. This the second cut in key interest rates made by the BSP for this year.