7-yr T-bond rate down, PH offers Panda bond

MANILA — The average rate of seven-year Treasury bonds (T-bonds) issued by the Bureau of the Treasury (BTr) declined Wednesday, much like government securities auctioned Tuesday.

The debt paper’s rate, which has a remaining life of six years and eight months, slipped to 5.743 percent compared to the 5.934 percent that the seven-year paper, with a remaining life of six years and 10 months, fetched during the auction last March 24.

Tenders reached PHP51.278 billion, more than twice the PHP20 billion offer, which was awarded by the auction committee.

Deputy Treasurer Erwin Sta. Ana dubbed the result of the T-bond auction as “another great auction for us.”

He explained that the rate of the debt paper is 19 basis points lower compared to the one auctioned last March, “so it’s a good turnout.”

“Well obviously, this is still an offshoot of the rate cut last week,” he said referring to the 25 basis points slash in the Bangko Sentral ng Pilipinas’ (BSP) key policy rates.

The BSP’s policy-making Monetary Board (MB) attributed its decision to the continued deceleration of domestic inflation rate, with last April’s figure already down to 3 percent after peaking at 6.7 percent in September to October 2018.

Sta. Ana said the sustained slowdown of inflation is another factor in the drop in interest rates of government securities lately.

Meanwhile, Treasury executive said the government returned to the Panda bond market in Beijing, China on Wednesday after the 1.46-billion renminbi maiden issuance in March 2018.

Sta. Ana said they offered 2.5-billion renminbi worth of three-year Panda Bond, which is offered by a non-Chinese issuer in China.

He declined to give details on the pricing earlier but said the settlement date is on May 20.