Reissued T-bonds fetch higher yields

MANILA, Philippines - Reissued Treasury bonds (T-bonds) with a remaining life span of four years and 11 months fetched higher yields during yesterday’s auction, but remained aligned with market movements, amid global and domestic uncertainties.

The Bureau of Treasury (BTr) yesterday made full award of reissued P15 billion T-bonds with an average rate of 4.030 percent, 15.4 basis points higher than the previous rate of 3.876 percent.

Total tenders amounted to P38.994 billion, over 2.5 times the P15 billion offer.

“It’s more than two and a half times oversubscribed, and the rates are within benchmarks. It’s a very healthy turnout for the auction,” National deputy treasurer Erwin Sta. Ana told reporters.

He said demand from the market remains on the shorter end of the curve in light of uncertainties and risks, such as the increase in US interest rates, as well as geopolitical developments in Europe.

“You’re looking at the Fed (US Federal Reserve) actions, the fiscal policies of the US administration, and of course, uncertainties in Europe, Brexit, etc,” Sta. Ana said.

Sta Ana said the BTr remains very vigilant in monitoring the external events and shifts as they affect domestic rates.

A local trader, meanwhile, said the result of the auction was within market expectations. The trader attributed the higher rates to the expected increase in inflation, risks of monetary policy tightening, and possible widening of budget deficits given the administration’s thrust to intensify spending on infrastructure and social services.

The trader said these factors are further burdened by the weakening of the peso, which has traded over P50 to $1 in the past few days.