By Joann Villanueva/PNA
MANILA — Investors swamped Tuesday’s auction of the Philippines’ 10-year Treasury bond (T-bond) but the paper’s interest rate slipped on expectations that domestic inflation rate will continue to decelerate.
Average rate of the T-bond fell to 6.829 percent from 7 percent during the auction last December 11. The freshly-issued debt paper’s coupon rate stood at 6.875 percent.
Tenders totaled PHP52.989 billion, more than double the PHP20 billion offering. The auction committee made a full award.
National Treasurer Rosalia de Leon told reporters that the committee has so far been pleased with the outcome of the first two auctions this year.
On Monday, the 182-day and 364-day Treasury bills (T-bills) also attracted high bids, which de Leon likewise attributed to investors’ anticipation of slower inflation rates in the coming months.
Last year, the rate of price increases peaked at 6.7 percent in September to October and has declined to 6 percent and 5.1 percent, respectively, in the next two months, which authorities traced to increased supply of food items, such as rice, the lack of which was among the reasons for the big upticks of inflation rates in most of 2018.
De Leon said auction results to date showed investors’ preference for longer-tenor papers.
She also identified the “very guarded remarks” of Federal Reserve chairman Jerome Powell as additional plus for local securities.
Earlier, Powell said US monetary officials “will be patient” with their policy decisions given the uncertainties in the global economy.
De Leon said she is hopeful that the encouraging results of the initial auctions this year will be carried over in coming weeks.
“And we also see that there is liquidity onshore as well. Hopefully for the next auctions, it will be replicating this kind of auction outcomes,” she added.
With the high demand for the debt paper, the Bureau of the Treasury opened its tap facility to offer the same tenor after Tuesday’s auction.
