Investors long on bonds

Bond investors on Tuesday continued to lock in on the long end of the yield curve at the sale of 10-year Treasury bonds (T-bonds) by the Bureau of the Treasury (BTr).

This improvement also triggered the agency’s TAP Facility anew having the same P20 billion ceiling as the original offer.

This encouraged the BTr to award in full all P10 billion worth of bonds amid the strong market demand that also further triggered reopening the Treasury’s tap facility. This, in turn, allowed the top ten market makers to access bonds even after the main auction was over.

Rates for the 10-year security dropped 14.6 basis points averaging only 6.829 percent from the previous 6.975 percent as demand accelerated to P52.98 billion from only P49.38 billion the last time it was sold.

National Treasurer Rosalia de Leon expressed satisfaction that both the rate and demand improved.

“We are very much pleased with the results and the participation of our GSED (government securities eligible dealers). So, we see now the appetite is really towards the long end,” she said.

This has reference to the erstwhile above-target domestic inflation threat and the growing likelihood that the US Fed, still the world’s most influential central bank, would keep its borrowing rate unchanged when it meets later this month.

This improvement also triggered the agency’s TAP Facility anew having the same P20 billion ceiling as the original offer.

“Hopefully at the next auction, (the investors) will replicate this outcome,” De Leon said.