By Joann Villanueva/PNA
MANILA — The Bureau of the Treasury’s (BTr) auction committee on Tuesday made a full award of the seven-year Treasury bond on the back of high demand and drop in rates.
It offered the debt paper for PHP20 billion but tenders reached more than three times that amount at PHP73.69 billion.
Rate of the securities declined to 5.934 percent, down from the 6.250 percent it fetched during the auction last February 12.
Deputy Treasurer Erwin Sta. Ana attributed the high demand for the debt paper to investors’ preference for longer-tenor securities.
“As we have said before contributors would be the inflation path (after the) BSP (Bangko Sentral ng Pilipinas) revised its inflation target for the year and, of course, (the) dovish comments from the Fed (Federal Reserve),” he said.
Last week, BSP’s policy-making Monetary Board (MB) cut the central bank’s inflation forecast for this year to 3 percent, from 3.1 percent set during the Board’s meeting last February, due to expectations that inflation will continue to decelerate.
After peaking at 6.7 percent in September and October 2018, domestic inflation rate continued its slowdown, with the February 2019 figure already at 3.8 percent from 4.4 percent in the previous month.
Relatively, US Federal Reserve officials have repeatedly said that they will be more circumspect in increasing the Fed’s key rates further given the current outlooks on both the US and global economies.
Sta. Ana also noted the high liquidity situation in the country as proven by the large submission of tenders during the auction.
He, however, said that the tap facility was not opened for this tenor during the day, as it was in the past when tenders were high.
“We are closely monitoring disbursements also because we don’t know if it will be sustained at this level,” he said.
“We see some slowdown in the disbursements so that’s why we are also trying to balance whether we are borrowing more or we keep it at a program,” he added.
In the first month this year, government spending posted a 7 percent year-on-year decline to PHP212.2 billion from year-ago’s PHP228.7 billion.
BTr earlier traced this to delays in the implementation of the new government projects and the scheduled adjustment of state workers’ compensation due to the delay in the approval of the 2019 national budget.
