THE demand for long-term government securities more than doubled to over P70 billion as investors’ asking yields for Treasury bonds (T-bonds) dropped on the back of easing inflation and pauses in monetary policy rates.
Tuesday’s auction by the Bureau of the Treasury (BTr) saw total bids for the 15-year T-bonds reach P71.303 billion, more than triple the P20-billion programmed amount for the tender.
With the high demand and easing yields, the Treasury made a full award of the tender raising the full P20 billion amount.
The tender saw yields averaging at 6.593 percent, lower than the comparable PHP BVAL yield of 6.78 percent. The debt papers fetched rates between 6.483 percent and 6.65 percent.
Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the results of Tuesday’s auction were in stark contrast with the previous 15-year T-bonds tender that resulted in a full rejection.
Ricafort also noted that the total bids in the recent tender were “unusually higher” compared to previous auctions in recent months.
“Lower auction yield also due to the latest rate pause by the Fed and the [Bangko Sentral ng Pilipinas] and possible Fed rate cut/s in 2024 that could be matched locally,” the RCBC executive said.
“Also supported by easing inflation trend moving closer to the central bank’s inflation target, as largely supported by the easing trend in global oil prices to the lowest in 3 to 4 months as well as the recent decline in U.S. Treasury yields to 2-month lows for the 10-year benchmark to 4.48 percent (down from the immediate high of 5.02 percent posted on October 23, 2023,” Ricafort added.
This month, the national government programmed to borrow as much as P225 billion from the tender of T-bonds and Treasury bills.
The national government has been struggling to borrow its full target amount from the domestic market as investors have been asking for higher than acceptable yields, particularly for T-bills, amid volatile market conditions.