Reissued T-bonds yield lower on full award

MANILA, Philippines — Reissued 10-year Treasury bonds (T-bonds) fetched lower rates following the drop in inflation last February, as well as the central bank’s statements on a possible monetary policy easing, the Bureau of the Treasury (BTr) said yesterday.

During yesterday’s auction, securities with remaining life span of nine years and 10 months fetched an average rate of 6.196 percent, 63.3 basis points down from the 6.829 percent recorded in the previous auction for the same securities last Jan. 8.

The auction committee fully awarded P20 billion worth of reissued T-bonds, while total tenders reached P54.603 billion or more than 2.7 times the offer volume.

In an interview after the auction, Deputy treasurer Erwin Sta. Ana said rates went down as market took cues from the lower inflation rate in February, as well as the policy pronouncements of newly appointed BSP Governor Benjamin Diokno.

“I think the market is actually just looking for how inflation would be moving forward. So now that we have seen inflation falling within the band already, it just shows on the rates for this auction,” Sta. Ana said.

“And then, there’s also, of course, news about possible easing by the BSP given the pronouncements of Diokno in his interview. So we think those are the catalysts for these rates,” he said.

Despite healthy demand and lower rates, Sta. Ana said the BTr would not open the tap facility for the 10-year T-bonds due to the “comfortable” cash position of the Treasury, especially after the issuance of Retail Treasury bonds (RTBs).

“We have settled today the five-year RTB. So from a cash stand point, it’s actually better for us because of the settlement. We’re talking about P235.9 billion, almost P236 billion in fresh cash for us. And then we had a full award so we are in a good position. That doesn’t mean that when we open it, we’re in any worse position but it’s very comfortable (right now),” he said.

The government was able to raise P235.935 billion from the two-week sale of five-year RTBs from Feb. 26 to March 8.

The volume raised is almost eight times higher than the P30 billion initial volume set for the RTB offering.

This is likewise higher than the P121.765 billion RTBs sold in the government’s previous RTB offering in June last year, but lower than the P255.4 billion record generated in an RTB sale in November 2017.

The securities were issued yesterday, and awarded at a coupon rate of 6.25 percent.