Yield on 5-yr T-bonds down

MANILA, Philippines - The yield on five-year Treasury bonds (T-bonds) fell during the government’s auction yesterday which was heavily subscribed by investors.

The rate for the five-month debt paper averaged at 3.267 percent, 25. 3 percentage basis points lower than the 3.52-percent average from the previous auction.

Rates declined even as bids reached P66.46 billion or more than twice the government’s programmed offering of P25 billion.

Despite the oversubscription, the government decided to stick to its borrowing program and accepted only P25 billion worth of bids.

The latest float is a reissue of the five-year debt paper awarded on November 22, 2012, which fetched an average interest rate of 3.875 percent.

National Treasurer Rosalia V. De Leon said the accepted bids reflected the rates in the secondary market and that of inflation.

De Leon said the oversubscription is an indicator of investors’ strong preference for medium-term bonds.

She said the government remains  awash with cash and that the market remains  liquid.

The Bangko Sentral ng Pilipinas is widely expected not to tweak its monetary policy until the end of the year to sustain economic growth amid easing inflation.

The central bank aims to keep inflation between three and five percent this year to stabilize prices to safeguard the purchasing power of consumers.

For next year, the government aims to lower inflation to two to four percent.