Bureau of the Treasury caps rates, limits Treasury-bonds award

MANILA, Philippines — The Bureau of the Treasury (BTr) decided yesterday on a partial award of fresh three-year Treasury-bonds (T-bonds) as the market continued to ask for higher interest rates for long-dated securities.

Only about P14.9 billion of the P20 billion T-bond offering was awarded after the BTr was forced to cap rates at 4.25 percent.

Despite this, the coupon rate fetched by the securities was 22.3 basis points higher than the 4.027 percent recorded in the previous auction.

Total tenders amounted to P39.11 billion, almost twice the original volume.

Sought for comment, National Treasurer Rosalia de Leon said the auction decided for a partial award to temper the rates of the debt papers.

“There will be a significant increase if we had done a full award during this auction. So we decided to moderate the increase, which we think should really be at that level (4.25 percent), so we went for a partial award,” De Leon said.

De Leon said results of the auction reflected the market’s continued preference for short-term securities.

“The preference of the investors are really on the short tenor. It’s driven by first, the expectations on the US Fed rates and of course, they are also watching what would be the BSP’s action come the Monetary Board meeting this Feb. 8,” she said.

In addition, De Leon said there are concerns of overheating and high inflationary expectations.

Earlier, the BTr announced the national government is planning to offer P120 billion in Treasury-bills and P120 billion in Treasury-bonds in the first three months.

The amount was higher than the P200 billion revised borrowing program set by the Treasury in the fourth quarter of 2017.