By Aaron Michael C. Sy, Reporter
THE GOVERNMENT fully awarded reissued Treasury bonds (T-bonds) on Tuesday at lower yields, as investors placed strong bids after the Bangko Sentral ng Pilipinas’ (BSP) latest policy rate cut and signals that its easing cycle might end soon.
The Bureau of the Treasury (BTr) raised P30 billion as planned from the reissued 10-year bonds, with tenders reaching P66.69 billion — more than double the offer. This brought the outstanding volume for the series to P485.6 billion.
The securities, which have a remaining life of seven years and 13 days, were awarded at an average rate of 5.939%. Accepted yields were 5.9% to 5.95%.
The average rate dropped by 18.9 basis points (bps) from July 8 and was 81.1 bps below the 6.75% coupon. Still, it was slightly higher than secondary market levels — 2.1 bps above the 5.918% yield for the same series and 3.4 bps over the 5.905% rate for seven-year debt as of Sept. 1, based on PHP Bloomberg Valuation Service reference rates.
A trader said demand was solid, with a bid-to-cover ratio of 2.22.
The T-bond’s yield fell from its last auction “likely due to the after-effects of BSP’s rate cut last week, as well as the threat of more rate cuts before the year ends,” a trader said in a text message.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., noted that the seven-year bond yield was among the lowest in eight-and-a-half months, reflecting market optimism after the BSP move.
“BSP Governor Remolona gave less dovish signals on a possible one 25-bp BSP rate cut for the rest of 2025 if economic data remained weak, or even no more rate cut for the rest of 2025 if the economic data remained the same,” he said in a Viber message.
He added that expectations of sustained liquidity, benign inflation and possible inclusion of Philippine sovereign bonds in the JPMorgan Global Emerging Market Bond Index might be supporting demand.
Such index inclusion could draw more foreign investor flows into peso-denominated government securities.
The BSP on Thursday delivered its third straight 25-bp cut this year to 5%. Since August 2024, the central bank has slashed benchmark borrowing costs by 150 bps.
BSP Governor Eli M. Remolona, Jr. said the central bank could still implement one more 25-bp cut within the year to support the economy if needed, though this might also mark the end of the easing cycle.
He added that the likelihood of additional moves would depend on economic data in the coming months. The Monetary Board has two remaining meetings scheduled for October and December.
The Treasury aims to raise P220 billion from the domestic market this month — P100 billion in T-bills and P120 billion in T-bonds — to help fund the budget deficit, capped at P1.56 trillion or 5.5% of gross domestic product this year.
