Investors snap up P9B worth of 7-yr T-bonds

The Treasury Bureau on Tuesday sold P9 billion worth of seven-year Treasury bonds following renewed investor appetite for government debt papers. For this paper, investors placed P40.687 billion in total tenders, four times more than the P9 billion on offer. The average rate of the seven-year bonds settled at 5.885 percent — 44.9 basis points lower than the previous rate of 6.334 percent. Bids ranged from 5.750 percent to 5.948 percent. National Treasurer Roberto Tan said the Bangko Sentral ng Pilipinas (BSP) decision to raise its policy rates removed uncertainties in the market and fueled investor interest in the government debt. “The policy rate hike is supposed to temper inflation pressures, particularly the second round effects," Tan said, referring to the impact of the recent oil price, transport fare and hi-way toll increases, as well as impending wage increases. Last week, the BSP raised rates by 25 basis points to 4.5 percent from 4.25 percent to temper inflation, which in April accelerated to a year-high of 4.5 percent. The BSP has set an average inflation target of 3 percent to 5 percent this year and in 2012. Tuesday’s borrowing was part of the planned P117 billion program for the second quarter of the year. Under the program, the bureau increased anew the size of its T-bill auctions to P9 billion from P8.5 billion. — JMT/VS, GMA News