Some of the banks and trust units have found the term-deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) already unappealing on Tuesday and redeployed a portion of their assets to the Bureau of the Treasury (BTr) where their presence was betrayed by a surfeit of bids for five-year Treasury bonds (T-bonds).
At its latest auction, the BTr awarded in full the P15 billion on offer upon seeing the investors that used to exploit the rich rewards presented by the BSP’s TDF were, instead, looking to invest in risk-free government securities.
According to National Treasurer Rosalia V. de Leon, the turnout of bids at Tuesday’s auction may be traced to the reduction in the BSP’s 28-day TDF from P110 to just P100 billion.
“I guess everybody’s flocking the government securities market. And the offering today is something that caters to their appetite given that [interest rates are] in the belly of the curve,” de Leon told financial reporters.
The BTr received tenders almost twice the full subscription amounting to P29.951 billion that forced the committee to reject P14.952 billion.
The five-year T-bond rate now averages 24.7 basis points lower to 3.979 percent, from 4.226 percent set at an earlier auction.
The reissued T-bonds have a remaining life of four years and three months.
“We’re happy with the participation of the GSEDs [government securities eligible dealers]. I suppose that’s because they want to improve their respective performance. Sometime before the end of the year we’ll also be selecting our market makers,” she added.
Data from the BSP showed the 28-day TDF in August attracting tenders totaling only P103.33 billion, equal to only 73.8 percent of the P140 billion offered for the week.
The BSP kept the volume deposit minimum unchanged at P40 billion for the seven-day TDF and P140 billion for the 28-day TDF, with the volumes having been in place since May 2017.
De Leon said the government is focused on the planned panda bond issuance seen issued by November
this year.
The Department of Finance earlier said the BTr tapped the Bank of China and Standard Chartered Bank as lead issuers for the $200-million sale exercise.
“For now we’re just focused on the panda market. [It will be issued] onshore,” she said.
Panda bonds are renminbi-denominated securities from a non-Chinese issuer but sold in the People’s Republic of China.