T-bond rates up on high bids

MANILA, Philippines — Five-year Treasury bonds (T-bonds) fetched higher rates yesterday, prompting the Bureau of the Treasury (BTr) to cut the accepted bids for the reissued securities.

During yesterday’s auction, the BTr capped the accepted rates for five-year T-bonds at a high of 7.5 percent, resulting in partial award for the securities.   

In the end, the BTr was able to sell only P9.74 billion worth of debt papers, lower than the P15 billion offering volume, at an average rate of 7.342 percent.

This was 144 basis points higher than the 5.902 percent fetched by the same securities in its last successful auction on Aug. 14.

The auction was slightly oversubscribed, with total tenders reaching P15.73 billion.

In an interview after the auction, national deputy treasurer Erwin Sta. Ana said the auction committee decided on a partial award as investors asked for rates higher than what was acceptable for the BTr.

“Obviously the bids came in a little higher than what we’ve expected. Although the rate were in the cut off, that’s within the initial feedback from our government securities eligible dealers. So based on our survey, it reflects the rate at which we cut the auction already,” Sta. Ana said.

He said the demand for the debt papers was not robust as the market is still on a wait-and-see stance.

 “We’re still on a rising rate environment and tendency for market participants is to stay on the sidelines until there’s  better clarity on where we are,” he said.

Meanwhile, Sta. Ana said the BTr is still considering a possible Retail Treasury Bond (RTB) issuance in the last quarter of the year. However, he said the volume for the fund raising activity would still depend on the government’s funding requirement.

“The size depends on how much we’ve left on the financing program, how much we have raised so far and we have to balance it out on how fast the phase of disbursement is so we will decide later on the actual size,” the official said.

Sta. Ana said the BTr has raised more than half of the P640 billion in domestic borrowings programmed for this year.

He said the issuance would still depend on market conditions.

“We have to know where market is within the fourth quarter. Of course, we have to look at the liquidity conditions, as well,” he said.