Reissued 10-year T-bonds fully awarded, yield drops

MANILA, Philippines — The Bureau of Treasury (BTr) yesterday made a full award of reissued 10-year treasury bonds as investors swarmed the auction, prompting officials to open the tap facility due to oversubscription.

The reissued government securities with a remaining life of nine years and thee months fetched an average rate of 6.975 percent, 1.06 percent lower than the 8.035 percent recorded during the last auction for the same debt paper.

The P15 billion offering was more than three times oversubscribed as total bids reached P49.39 billion.

National Treasurer Rosalia de Leon said investors are locking it at higher rates with the expected slow down in inflation due to lower oil and food prices.

“So again we continue to see the appetite of investors on the long end. At the same time they are locking in on the rates already based on expectations that rates will further trend downwards given lower inflation expectations already in the coming for November,” De Leon said.

The Bangko Sentral ng Pilipinas (BSP) expects inflation to ease to a range of 5.8 to 6.6 percent in November after trending upward to hit a near-decade high of 6.7 percent in October.

De Leon said the treasury is opening the tap facility window for the 10-year T-bonds for a volume of P15 billion.

“The same rules apply but we don’t have a cap anymore.  Now we can upsize more than P15 billion,” she said.

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