Rates lower for reissued T-bonds

MANILA, Philippines — Reissued seven-year Treasury bonds (T-bonds) yesterday fetched lower rates amid healthy market demand due to the expected easing of inflation, according to the Bureau of the Treasury (BTr).

Rates for the securities with remaining life span of six years and four months averaged 6.974 percent, 11.1 basis points lower than the 7.085 percent recorded during the last successful auction for the same debt papers.

The P15 billion offering was more than four times oversubscribed, with total tenders amounting to P62.227 billion.

National Treasurer Rosalia De Leon said the results of the auction reflect the market’s preference for the intermediate part of the curve, especially now that interest rates are seen to continue its downward trend.

She said government securities eligible dealers now want to lock in their investments in long-term debt papers while interest rates are still high.

“We are pleasantly surprised. The preference is going into the intermediate. The investors want to lock in the rates right now due to the expectation that the rates will be falling already given that inflation is expected to already trend downwards,” De Leon said.

Due to overwhelming demand from investors, the BTr once again opened its tap facility to issue another P15 billion in seven-year securities at the awarded rate.

The tap facility allows government securities eligible dealers to access bonds after the initial primary auction.

Access to this facility, however, is now limited to the BTr’s “market makers” as part of their privileges. These include BDO Unibank Inc., Bank of the Philippine Islands, China Banking Corp., Citibank Philippines, Development Bank of the Philippines, First Metro Investment Corp., Land Bank of the Philippines, Metrobank and Trust Co., Rizal Commercial Banking Corp., and Security Bank.

Last week, the BTr also opened its tap facility to market makers following the successful auction for five-year debt papers.

Almost P51 billion in tenders flooded the facility, more than three times the P15 billion bond issuance.

The securities were awarded at an interest rate of 7.003 percent, based on what was yielded by five-year debt papers during its auction earlier the same day.