NextGen Day

On Tuesday, the price of 10-year Treasury bonds (T-bonds) decreased, although demand remained high.

The average interest rate on the debt paper decreased from 7.344 percent to 5.913 percent.

The auction committee made a full award after the Bureau of the Treasury (BTr) tendered the securities for PHP35 billion.

As soon as the price reached PHP93.696 billion, bids virtually tripled.

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC), the debt paper’s interest rate is lower than that of the same-tenor paper on the secondary market, which was 6.06 percent as of January 24.

According to Ricafort, the country’s current trend of falling government securities (GS) rates is partially attributable to the “stronger peso exchange rate lately to among the strongest in more than seven months,” which is anticipated to “ease import prices and overall inflation.”

Large demand/bids for the national government bond sales over the previous two weeks also contributed to lower auction yields amid dovish signals from the Fed (Federal Reserve) and local monetary officials, especially on smaller +0.25 rate hike/s and recent signals about the local monetary tightening cycle approaching its end by 1Q (first quarter) 2023 amid a possible easing of year-on-year inflation, the author said.

According to Ricafort, signals from Bangko Sentral ng Pilipinas (BSP) officials about a potential reduction in banks’ reserve requirement ratio (RRR) during the first half of this year have also helped spirits.

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