THE Bureau of the Treasury (BTr) awarded the full P20 billion for reissued seven-year Treasury bonds (T-bonds) on Tuesday as the cut in reserve requirement ratio (RRR) helped whet investors’ appetite for the government security.
National Treasurer Rosalia V. de Leon told reporters that the auction committee decided to fully award the seven-year T-bonds amounting to P20 billion with investors offering lower rates.
“First of all, it’s a one-liner for the auction. We also expect that rates would come down given the recent developments. So we heard about pronouncements from both [Federal Reserve System Chairman Jerome Powell and Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno] that the cut on policy rates is on the table given the benign inflation,” de Leon said.
“So all these developments and the anticipation of a cut [in RRR] in July, as well as maturities this week of about P54 billion, add up to more liquidity,” she added.
A one-liner occurs when banks or investors provide the same rate or the offers converge at a single rate for a government security being auctioned off.
Bids for seven-year T-bonds amounted to P74.940 billion, almost four times oversubscribed than the offer of the BTr.
The average annual rate for the security settled at 4.845 percent, 89.8 basis points lower than the 5.743 percent set during the T-bonds auction last May 15.
In May, the Monetary Board (MB) decided to reduce the RRR of universal and commercial banks by 200 basis points (bps) to 16 percent, from 18 percent.
The MB slashed the RRR by 100 bps on May 31 and by 50 bps on June 28. The 50-bps cut will happen on July 26.
The MB also cut the RRR of the universal and commercial banks by a total of 2 percentage points.