T-bond rate down Wednesday

FILE: Bureau of Treasury (BTr) (Photo: Bureau of the Treasury/Facebook)

MANILA — Rate of the Philippines’ seven-year Treasury bond (T-bond) fell to 4.39 percent Wednesday on higher demand for the debt paper.
Its rate during the auction last Aug. 8 was 4.510 percent while secondary market rate for the same tenor Wednesday morning stood at 4.6157 percent.

The Bureau of the Treasury (BTr) offered the bond for PHP15 billion but banks offered PHP29.023 billion worth of bids, which National Treasurer Rosalia de Leon said was an indication of the high liquidity situation in the domestic economy.
She partly attributed the high demand for the paper to market players’ preference for the seven-year securities instead of the shorter tenor offered by the Bangko Sentral ng Pilipinas (BSP) through the auction of its seven-day and 28-day Term Deposit Facility (TDF) Wednesday.

“I think there’s also a preference to look for yields so they went into the seven years, moving out of the shorter tenor brackets of the 28-day. It shows the very liquid tone of the market,” she told journalists after the T-bond auction.

The BSP’s 28-day TDF registered undersubsription this week when the PHP100 billion offering was met by only PHP87.562 billion tenders.
De Leon also said market players took on a wait-and-see stance ahead of central bank’s policy rate setting meet on  Nov. 9, 2017.

“We’re very pleased with the result of the auction,” she said.

Meanwhile, De Leon said requirements for the issuance of the Marawi bond, which Budget and Management Secretary Benjamin Diokno said would probably be issued in January 2018, were being finalized.

Tenors being considered were between five and seven years, she said.

Issuance amount was still being determined pending the assessments on the cost of rehabilitation, De Leon said.

“In the meantime, we’re working on the Agri-Agra eligibility of the bonds so that will trigger stronger demand for the bonds given that it would be a substitute for compliance,” she said.

Banks are required under Republic Act (RA) 10,000, otherwise known as An Act Providing for an Agriculture and Agrarian Reform Credit and Financing System Through Banking Institutions, to allocate 10 percent of their funds for agrarian reform credit (Agra) and 15 percent for other agricultural credit (Agri). (PNA)