T-bond rates rise on partial award

MANILA, Philippines — The Bureau of the Treasury (BTr) yesterday made a partial award of the seven-year Treasury-bonds (T-bonds) as investors asked for higher rates ahead of the US Federal Open Market Committee (FOMC) meeting this week.

The auction committee accepted P7.612 billion in bids for securities maturing in 2025 after it capped the rates at six percent. This was lower than the original issue size of P10 billion.

As a result, the bonds fetched an average interest rate of 5.976 percent, 11.1 basis points higher than the 5.865 percent recorded in the previous auction.

This was, however, lower than the 6.003 percent average rate the securities would have yielded had the auction committee went for a full award.

The auction was oversubscribed, with total tenders amounting to P14.382 billion.

Erwin Sta. Ana, national deputy treasurer, said the committee decided for a partial award to temper down the rate to a “fair pricing” for seven-year securities.

Sta. Ana said the market continued to factor in concerns about domestic inflation, as well as the expected rate hike by the US Federal Reserve.

Meanwhile, Sta. Ana said the government is set to conduct investor briefing in Tokyo next week in relation to the Philippines’ onshore samurai bond offering.

He said the BTr is on track to conduct the fund raising activity in the third quarter.