August 9th, 2022
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) has called the results of today’s auction of government securities by the Bureau of Treasury an “undeniable sign of the growing confidence of the market in President Marcos’s economic team and the prospects of the broader Philippine economy.”
The Bureau of Treasury offered P35 billion in ten-year bonds with a residual maturity of 6 years and 5 months. The coupon rate was 6.875%. Awarded bids were at least 90 basis points lower than the offered coupon rate.
“This result demonstrates that the markets are responding positively to the economic team’s assurance of policy continuity, fiscal prudence, and medium-term growth. Imagine, with inflation rate of 6.4% as of July, the market was willing to buy Philippine bonds at 5.9%. That’s negative real interest rates. Institutions are willing to take a real loss because they see the country as a safe haven.”
“Actually, the 10-year yield started to drop almost without interruption since the start of PBBM’s term on June 30. That is an unmistakable sign of confidence that I hope the administration can capitalize on. We can sustain that confidence through a program of fiscal and economic reform.”
“The rate also shows that inflation expectations are starting to ease. For investments, that’s what matters,” Salceda added.
Pension, corporate reforms forthcoming
Salceda was at the Bureau of Treasury today when the auction was conducted. The House tax chair was in a meeting with National Treasurer Rosalia de Leon on structural reforms for the country’s pension and retirement system.
“I discussed with the Treasurer my ideas for pension reform, particularly for the private sector. We also discussed measures to boost available cash for the national government.”
“We are crafting a reform of the corporate pension sector to allow the Bureau of Treasury to hold private pension funds that are 5 years due at the earliest. That would create a steady stream of cheap cash for the national government, while making private pensions government guaranteed, with sure income due to being invested in government securities.”
“Overall, these reforms should also strengthen the liquidity of the national government, ensuring that we can fund our needs when they fall due. When you’re funding the development of an emerging economy, cash is always king.”