THE GOVERNMENT made a full award of the reissued Treasury bonds it offered on Tuesday as rates were in line with secondary market levels amid expectations that the Bangko Sentral ng Pilipinas (BSP) will resume its monetary easing cycle this week.
The Bureau of the Treasury (BTr) raised P30 billion as planned via the reissued 20-year bonds it auctioned off on Tuesday as total bids reached P53.356 billion, or almost twice the amount on offer.
The full award brought the total outstanding volume for the bond series to P413.3 billion, the Treasury said in a statement.
The bonds, which have a remaining life of six years and three months, were awarded at an average rate of 5.986%. Accepted bid yields ranged from 5.925% to 6.015%.
The average rate of the reissued papers was down by 14.2 basis points (bps) from the 6.128% fetched for the series’ last award on Aug. 13, 2024. This was also 187.2 bps lower than the 8% coupon for the issue.
However, this was 4.33 bps higher than the 5.9427% quoted for the seven-year bond, or the benchmark tenor closest to the remaining life of the issuance, and 7.78 bps above the 5.9082% seen for the same bond series at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.
A trader said the government fully awarded its T-bond offer as rates were within the expected range and were close to the comparable secondary market yields.
“It looks like investors are comfortable to buy at the current levels in view of a possible rate cut this Thursday,” the trader said in a text message.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message that T-bond rates were in line with secondary market levels as better-than-expected March headline inflation reinforced bets of a BSP rate cut this week.
Philippine inflation eased to 1.8% in March from 2.1% in February and 3.7% in the same month a year ago, the government reported last week.
This was the lowest consumer price index (CPI) reading in 58 months or since the 1.6% logged in May 2020 at the height of the coronavirus pandemic.
This was also within the BSP’s 1.7%-2.5% forecast for the month and slightly below the 2% median estimate in a BusinessWorld poll.
For the first quarter, the CPI averaged 2.2%, well within the central bank’s 2-4% annual target.
Analysts have said that the slower-than-expected March inflation print and prospects of an economic slowdown due to the US government’s trade policies, give the BSP room to cut rates further.
A BusinessWorld poll conducted last week showed that all 17 analysts surveyed expect the Monetary Board to reduce its target reverse repurchase rate by 25 bps to 5.5% at its meeting on Thursday.
This would mark its first easing move since December as the BSP unexpectedly kept benchmark interest rates steady in February to assess the potential impact of the Trump administration’s evolving policies on the Philippine economy.
The Monetary Board has brought down borrowing costs by a cumulative 75 bps since it began its rate-cut cycle in August last year.
BSP Governor Eli M. Remolona, Jr. last month said that the central bank could slash benchmark rates by up to 75 bps this year.
The BTr is looking to raise P245 billion from the domestic market this month or P125 billion via Treasury bills and P120 billion through T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — Aaron Michael C. Sy
