YIELD of the seven-year Treasury bonds was almost flat during Tuesday’s auction despite investors’ optimism on the country’s inflation rate.

The debt paper fetched a rate of 5.907 percent or 2.2 basis points higher than the last time the paper was auctioned off April 12.

Tenders reached P31.652 billion, and the Bureau of the Treasury made a full award of P9 billion.

Meanwhile, the done deal for the said tenor at the secondary market was at 5.873 percent or a mere three basis points lower than the government’s auction.

“The view of the market now leans toward the positive side, and that they are becoming comfortable with what the interest rate should be,” National Treasurer Roberto Tan said after the auction. “Although the investors sought for a yield that is higher by three basis points compared to the done deal at the secondary market, three basis points is insignificant.”

For the week, the government has P1.4 billion worth of maturing Treasury bills.

Meanwhile, Tan said the forthcoming debt swap may take place in July at the earliest, instead of the earlier reports that it would be launched within the month.

Last week, the government said it will issue new peso-denominated bonds with longer tenors and exchange them for existing shorter-dated debt paper. Deputy Treasurer Eduardo Mendiola earlier said the government would issue 10- and 20-year notes to swap them with shorter-dated paper.

“The issue size would still be determined depending on the proposal. But most likely it would be similar to the size of what we had issued in December,” Mendiola said.

In December, the government swapped around P190 billion of new 2020 and 2035 bonds with coupon rates of 5.875 and 8.125 percent, respectively.  The government raised another P10 billion in the form of new money.

“We still do not know whether there would be a new money component on the forthcoming bond exchange,” Tan said.

By August, the Aquino administration will have maturities of about P60 billion worth of Retail Treasury Bonds.