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 PRESSROOM / NEWS
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 | Republic of the Philippines
DEPARTMENT OF FINANCE
Roxas Boulevard Corner Pablo Ocampo, Sr. Street
Manila 1004
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July 20, 2010
7-YEAR T-BOND AUCTION RESULTS: JULY 20, 2010
BTr
FPPO-JEP
The National Government today successfully sold its P8.5 billion worth of re-issued 7-year Treasury bonds in an auction swarmed by the bond market. The average rate of the reissued debt hugely declined, mirroring the downward movement of rates in the secondary market as market players were able to throw aggressive bids today. It went down today by more than 20 basis points following the same outcome of the last Treasury bond auction two weeks ago, indicating market’s renewed appetite for longer-tenor debts.
Bids in today’s sale were driven largely by market’s strong appetite for government securities on the back of a benign inflation outlook. Market players competed for the reissued debt as they cheered on expectations of abating inflationary pressures for the rest of the year, on account of the continued softening of commodity prices and the recent pronouncements made by the Central Bank on inflation. The inflation rate for the month of June eased to 3.9 percent from 4.3 percent the previous month. The Monetary Board of the BSP on its policy meeting last week, kept its overnight and borrowing rates unchanged at 4.0 percent and 6 percent, respectively, on the back of a still manageable domestic prices. Furthermore, it lowered its inflation forecasts once again for the second time in a row to 4.0 percent from 4.7 percent for 2010 and to 3.0 percent from 3.6 percent for 2011. With inflation expected to remain benign and manageable has renewed market appetite and interest for bonds as manifested in the last two successive T-bond auctions.
Today’s sale of the reissued 7-year T-bonds recorded another significant drop in the yield. The seven-year debt with a remaining life of six years and eight months fetched an average rate of 6.809 percent, down by 19.1 basis points from the original coupon rate of 7.0 percent. The debt paper was first sold last March 30. When compared with the 7.03 percent average rate this paper fetched when reissued last June 8, today’s result was down by 22.1 basis points. Bids ranged from a low of 6.625 percent to a high of 6.873 percent. Today’s auction of Treasury bonds was oversubscribed, with banks wishing to unload liquidity, wanting to buy as much as P13.629 billion against the P8.5 billion offering. The Treasury awarded as planned. For this week, the local market would be waiting for the release of the government’s fiscal performance on the first six months of the year. As of May of this year, NG’s budget deficit already stood at P162.1 billion.
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