Treasury makes partial award for 10-yr T-bonds
Mary Grace Padin (The Philippine Star) - November 7, 2017 - 4:00pm

MANILA, Philippines — Reissued 10-year Treasury-bonds fetched higher rates yesterday amid higher inflation and increased volume of government securities, prompting the Bureau of the Treasury (BTr) to make partial award of the P20 billion offering.

During yesterday’s auction, the 10-year T-bonds fetched an average rate of 4.915 percent after the Treasury capped the accepted rates at 4.925 percent.

As a result, only P10.21 billion of the P20 billion offering was awarded by the Treasury, even as it received P32.6 billion in total bids.

Despite this, the average rate was still 26.8 basis points higher than the 4.647 percent yielded by the same securities during the previous auction last Sept. 19.

This was, however, lower than the secondary market rate for 10-year securities which settled at 4.95 percent before the auction closed.

If the Treasury did not cap rates and proceeded with the full award, the average rate for the securities could have reached 4.936 percent, records showed.

National Treasurer Rosalia de Leon said the hike in rates could be attributed to the Treasury’s recent decision to increase the offering volume of government securities.

“Because they saw that we increased the auction volume from P15 billion to P20 billion, and then of course they saw the inflation rate of 3.5 percent. Going into the Fed, there is already a very high chance that the Fed will do a rate hike with the changing of the chairmanship to (Jerome) Powell,” De Leon told reporters after the auction.

De Leon said the final accepted rates were broadly in line with the secondary market rate of the same securities.

“We have a healthy cash buffer that would also allow us to meet our requirements until the end of the year and even going forward, so P10 billion is something that is adequate for us,” she said.

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