Yield of seven-year T-bonds slightly down

Tuesday, 17 July 2012 19:44 VG Cabuag / Reporter

YIELD of the seven-year Treasury bonds slightly went down during Tuesday’s auction as a result of investors’ huge interest to snatch government debt.

The fresh offering seven-year paper fetched a coupon rate of 4.75 percent, or 25 basis points lower than the 5 percent rate when the last time the said paper was auctioned off on April 24.

Tenders reached P20.95 billion, or more than two times oversubscribed compared with the government’s offer of P9 billion. The auction committee made a full award.

Finance Undersecretary Gil Beltran, who chaired the auction, said investors were elated with the string of good news in the economic and fiscal front.

“Our finances are so stable. Our deficit is lower than programmed and the debt ratio is going down. Our economy is going up, while inflation is going down plus we got an upgrade,” Beltran said after the auction.

“Those positive factors contributed to very stable interest rates,” he said.

The awarded rate was also 2.5 basis points lower than the secondary market rate of the same tenor of 4.724 percent.

The government earlier said it posted a budget deficit of P22.78 billion for the first five months of the year, far lower than the P82.7-billion deficit program for the said period.

Meanwhile, the Philippine economy as measured by the gross domestic product (GDP) grew by 6.4 percent in the first quarter of the year while the inflation rate in June eased to 2.8 percent from 2.9 percent in May.

Also, Standard and Poor’s Ratings Agency raised the country’s credit rating early this month to a notch below investment grade.

Beltran, however, said that the underspending problem of the government agencies still persists.

“If you look at the figures, without looking at the targets, it looks fine because your spending is 13 percent increase, that’s a good performance,” he said. “But we’re still below the spending program. I hope we can implement the (infrastructure) projects so we can use the money. The government has so much cash.”

According to the Department of Budget and Management (DBM), the government spent P668.4 billion during January to May, or 13 percent higher than the P591 billion expenditures for the same period last year. The target expenditures for the first half, however, was placed at P885.28 billion.