7-year T-bond rate rises slightly

MANILA, Philippines — Rates fetched by reissued seven-year Treasury bonds (T-bonds) rose by only a slight margin even as investors flocked the P15 billion offering, according to the Bureau of the Treasury (BTr).

During yesterday’s auction, rates asked by investors for securities maturing in six years and four months averaged 7.09 percent, 11.6 basis points higher than the 6.974 percent recorded during the previous auction.

National Treasurer Rosalia de Leon, however, said this was broadly aligned with the 7.005 percent Bloomberg Valuation Rate for seven-year debt papers.

This prompted the auction committee to fully award the P15 billion offering.

The auction was almost twice oversubscribed, with total tenders amounting to P29.92 billion.

According to De Leon, investors are swarming the BTr’s T-bond auctions as they already want to lock-in their funds while rates are still high. She said rates may already start their downward trend as inflation starts to ease.

In addition, she said the US Federal Reserve has become less hawkish on their statements regarding a possible rate hike this week.

Due to robust demand for the securities, the BTr has once again opened its tap facility to accept additional tenders for seven-year bonds.

De Leon said the amount to be awarded may be upsized from the usual P15 billion cap. This will still be awarded at 7.09 percent, the same rate as the one fetched during the auction.

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

Access to this facility, however, is limited to the BTr’s top 10 “market makers” as part of their privileges.

The BTr also opened its tap facility for seven-year bonds during its previous auction last Nov. 27.

Total tenders reached P53.9 billion, but only P15 billion was awarded at a rate of 6.974 percent.