P30 billion T-bonds fetch lower rates

MANILA, Philippines — The three-year Treasury bonds (T-bonds) fetched lower rates as investors swamped the auction facility amid strong liquidity in the financial market, the Bureau of the Treasury (BTr) said yesterday.

During yesterday’s auction, the BTr fully awarded P30 billion worth of three-year securities at an average rate of 2.946 percent, 106.8 basis points lower than the 4.104 percent in the previous auction.

They were likewise priced 33.6 basis points lower than the secondary market rate for the same tenor, which was recorded at 3.282 percent yesterday.

Total tenders amounted to P99.109 billion, more than three times larger than the P30 billion offer size.

In a text message to reporters, National Treasurer Rosalia de Leon said the results of the auction reflect the ample liquidity in the financial system, with investors flocking to safe havens or government securities amid the coronavirus disease 2019 crisis. 

She said the market’s appetite has also been stretched to tenors longer than one year as they search for higher yields amid a low inflation environment.

Given the strong demand from investors, de Leon said the auction committee decided to open the tap facility for the three-year debt papers for a total volume of P15 billion.

The national government has set a domestic borrowing program of P170 billion for May, of which P110 billion will come in the form of T-bills and P60 billion in T-bonds.

Another P30 billion worth of five-year debt notes will be auctioned off on May 26.

Earlier, de Leon said the BTr is now shifting to longer tenors as market appetite for this part of the curve has been revived.