BTr makes full award of P15-B 20-year bonds

MANILA, Philippines - The Bureau of the Treasury (BTr) awarded in full the fresh 20-year Treasury-bonds (T-bonds) it issued yesterday amid healthy demand from market participants.

The 20-year bond issuance fetched a coupon rate of 5.25 percent, 73.8 basis points higher than the 4.512 percent average rate during the last auction for papers with the same tenor in October 2013.

The auction attracted P28.037 billion in total tenders, nearly twice the original P15 billion offering.

This is the first time since 2013 that the national government issued a 20-year bonds, according to the Treasury.

“It’s a healthy turnout. Despite that this is on the longer sector of the curve, we are actually pleased with the turnout. It means that there’s investor confidence in the republic and that this sector of the curve has a demand,” National Deputy Treasurer Erwin Sta. Ana told reporters after the auction.

According to Sta. Ana, the coupon rate fetched during the auction was in line with market expectations.

“We believe that it’s fairly within the curve. It tracked where the curve is at right now,” he said.

A local bond trader, meanwhile, agreed the auction had a good turnout considering the strong demand and the good price for the papers.

The trader said the healthy appetite for the long-term bonds reflects investment requirements offshore.

“It’s a good thing that we actually have a new 20-year security. I think the market’s been waiting for this auction,” the trader said in a phone interview.

“We have to understand that across the curve, the short-date belly or the medium term securities and the long term, they all have their niche markets. For the longer-end we usually have institutional clients for that,” they said.