National Treasurer Rosalia De Leon.
MANILA -- The rate of 20-year Treasury bonds (T-bond) have declined to 5.015 percent Tuesday, prompting National Treasurer Rosalia de Leon to attribute the development to a high demand due to expectations of a reduction in the central bank’s key rates.
Its average rate is lower than the 5.17 percent the same tenor fetched during the auction last June 11, which de Leon also traced to the demand for longer tenor papers.
She reiterated market expectations for a slash in the Federal Reserve’s key rates after the two-day meeting of the Federal Open Market Committee on Wednesday (Manila time).
Analysts are also projecting another cut in the Bangko Sentral ng Pilipinas’ key rates after the meeting of the policy-making Monetary Board on August 8.
Another factor is the expected slowdown of the July inflation rate after the June figure reversed back to deceleration to 2.7 percent after an uptick to 3.2 percent last May.
With these reasons, demand for the 20-year T-bond during Tuesday’s auction reached PHP29.814 billion, higher than the PHP20 billion offer. The auction committee made a full award.
“Given these factors market (players) already would like to make sure that they are able to get something from the issuance of the 20 years before rates go down eventually because of the possible rate cuts,” de Leon said. (PNA)
