7-year T-bonds fetch higher rates

MANILA, Philippines — The Bureau of the Treasury (BTr) yesterday made a partial award of reissued seven-year Treasury-bonds (T-bonds) as the market asked for higher rates for the securities.

Only P4.915 billion in bids for seven-year debt papers were awarded after the auction committee capped the rates at 5.95 percent.

Despite this, the average rate of the bonds settled at 5.865 percent, 15.3 basis points higher than the 5.712 percent recorded in the previous auction.

This was likewise higher than the secondary market rate for the same securities, which fell to 5.7 percent before the auction closed.

The P10 billion offering was oversubscribed, with total tenders amounting to P15 billion.

Erwin Sta. Ana, national deputy treasurer, said the market asked higher rates due to risks posed by inflation and possible rate hikes from central banks.

“While the P15 billion bids submitted is actually quite healthy, I think market nowadays still prefer the shorter tenors...they get more demand because of uncertainties,” Sta. Ana said.

“They (investors) are looking at the inflation picture and then possible moves from the central banks. You are also contending with possible US rate hikes. So these are the things that the market is factoring in,” he said.

Meanwhile, Sta. Ana said the government is targeting to conduct its samurai bond issuance by the third quarter. However, he said the BTr has yet to determine the volume and tenor of the issuance.

Sta. Ana said the BTr is securing the necessary approvals from authorities in the Philippines and Japan.

This would be the first public samurai bond offering of the government, according to the official.

 “This is the first public samurai offering that the Philippines will be doing, the one that we did in 2010 was on a private placement basis so we are going public this time,” he said.

On the other hand, Sta. Ana said the Treasury is accepting proposals from banks for the planned dollar bond issuance of the government.        

 “We are supposed to receive proposals this week. We haven’t gone over them, some have submitted already,” he said.