BTr partially awards 7-year Treasury bond, rate declines

Bureau of the Treasury’s (BTr) auction committee members partially awarded the seven-year Treasury bond (T-bond) Tuesday, as investors took a wait-and-see stance amid economic developments overseas.


BTr offered the debt paper for PHP20 billion and tenders reached PHP22.149 billion. However, the auction committee awarded PHP10.399 billion.

Rate of the debt instrument declined to 4.503 percent from 4.845 percent during the auction of the same tenor last July 16.

Deputy Treasurer Erwin Sta. Maria told reporters after the auction that although bids for the debt instrument is higher than the offered volume, it is “not too high” which means “they really just covered the auction size.”

“And the committee thinks that it’s basically a reflection of a wait-and-see attitude from the participants because you know FOMC is around the corner (and) US treasuries are increasing overnight, you can see some increases in the 10-year (bonds). So that actually brought about the results,” he said.

The Federal Open Market Committee (FOMC) will have its next meeting on September 17 and 18.

Some market players forecast another rate cut after the 25-basis-point reduction last July to help ensure sustained growth of the US economy.

Sta. Maria further said domestic liquidity “is still quite ample” as shown by the auction results.

He also discounted the decline in interest rates of government securities as well as risk aversion to be a trend right now, as domestic factors like the deceleration of inflation rate, ample liquidity, and easing of the BSP rates remain positive. (PNA)