T-bond rates decline, first time in 3 months

MANILA, Philippines — Rates for long-term government securities declined for the first time in over three months as the central bank signaled that jumbo rate increases are over.

The Bureau of the Treasury yesterday made a partial award of P22.969 billion worth of reissued 20-year T-bonds on offer with a remaining life of four years and nine months.

The five-year T-bonds, the first offer for the month of December, fetched an average rate of 6.568 percent, 6.3 basis points below the 6.631 percent BVAL Reference Rate, which is the standard for securities.

Rates went from a low of 6.475 percent and a high of 6.625 percent. The average rate was lower than the 8.625 percent rate when the T-bonds were first issued in 2007.

This is the first time that rates for T-bonds went down after the 13.3-basis-point decline for the 10-year offer on Aug. 16.

“We saw rates aggressively decline with huge liquidity to deploy from maturities next week,” national treasurer Rosalia de Leon said.

“We took advantage to further compress rates close to secondary level. Markets also took a signal from the slower pace of rate hikes by the US Fed and the central bank,” she said.

Last week, the Bangko Sentral ng Pilipinas already dismissed additional huge interest rate hikes after raising key policy rates by a total of 300 basis points.

This, as the US Fed is set to deliver smaller rate increases in its upcoming meetings.

However, BSP Governor Felipe Medalla maintains that a pause in rate hikes may not be the case, especially as inflation remains elevated.

Meanwhile, the latest offering has a maturity date of Sept.6, 2027.

The latest T-bonds yield was also lower than the 7.131 percent rate during the last five-year bond on offer in Nov.7.

The securities attracted P60.514 billion worth of bids, oversubscribing the auction by 1.87 times, and 45 percent higher than the previous five-year offer that fetched P41.6 billion.

However, this is 14 percent lower than the P70.361 billion tenders last week.

The Treasury is targeting to raise P105 billion in long-term debt papers this December.