Partially awarded T-bonds fetch higher rate

MANILA, Philippines — The Bureau of the Treasury (BTr) yesterday made a partial award of the reissued 10-year Treasury bonds (T-bonds) as investors asked for higher rates while waiting for further action from the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).

The securities fetched an average rate of 6.35 percent, higher by 13.7 basis points than the previous rate of 6.213 percent after the auction committee capped the accepted bids at 6.375 percent.

As a result, only P4.08 billion was accepted by the BTr out of the P13.35 billion in bid applications.

The auction met healthy demand as total tenders represented an oversubscription from the original issue size of P10 billion.

In an interview, National Treasurer Rosalia de Leon said the auction committee decided on a partial award to temper the increase in rates. She said the government also continues to enjoy a sound fiscal position, which gives it leeway to reject bids.

De Leon said the auction saw higher rates as investors continued to show preference for shorter dated securities.

She said the strong demand for shorter dated securities continues to persist as the market watches out for further developments in the interest rate environment.

“They are still worried about further rate hikes by the Fed and eventually also the next action of the central bank, because some analysts are predicting another hike by the BSP this June when the Monetary Board meets for the policy meeting,” De Leon said.

Due to the continued rejection of bids on the part of the BTr, De Leon said the government may opt to adjust its borrowing program.

However, she said the improved collections of the Bureau of Internal Revenue and the Bureau of Customs could compensate to the lower amount raised by the BTr.

Meanwhile, De Leon said the government is looking to conduct a RTB issuance within the year.

She said the Treasury is monitoring results of auctions and developments in the market to determine if there is an opportunity for the issuance.