BTr fully awards P30 billion 3-year bonds

MANILA, Philippines — The Bureau of the Treasury (BTr) awarded in full the P30 billion worth of three-year securities up for sale yesterday as the debt papers’ coupon rate settled lower the  benchmark  rate amid strong demand from investors.

During yesterday’s auction, the newly issued three-year Treasury bonds (T-bonds) fetched a coupon rate of 2.375 percent, 1.5 basis points lower than the secondary market rate for the same securities, which settled at 2.36 percent in the previous day.

The rate was also down from the 2.558 percent average rate secured by three-year debt papers on June 9.

The P30 billion offering was almost three times oversubscribed, with total tenders amounting to P87.963 billion.

In a text message to reporters, National Treasurer Rosalia de Leon said the BTr decided to make a full award as the coupon rate for the securities was lower than the secondary market price.

She said the results of the auction reflect the market’s preference for the three-year tenor bucket. “Three years is a sweet spot with lower duration risk,” De Leon said.

Given strong demand, De Leon said the BTr decided to open the tap facility for three-year debt papers, for an additional volume of P15 billion.

The government is ramping up its borrowings to plug the deficit in its budget, which is now expected to widen to 9.6 percent of gross domestic product (GDP) due to the pandemic.

For September alone, the BTr is planning to sell P160 billion worth of securities in the domestic market.

The bulk or P100 billion of the amount will come in the form of T-bills, while the remaining P60 billion will be Treasury bonds.