Reissued 7-year bonds fetch lower rates

MANILA, Philippines — Reissued seven-year Treasury bonds (T-bonds) fetched lower rates yesterday amid strong demand from investors, the Bureau of the Treasury (BTr) said.

During yesterday’s auction, the BTr fully awarded P30 billion worth of securities with a remaining life span of six years and three months at an average rate of 2.719 percent.

This was 7.2 basis points lower than the 2.791 percent rate recorded in the previous auction.

The average rate was also lower than the secondary market rate for securities with the same tenor, which settled at 2.753 percent the previous day.

Total tenders amounted to P82.587 billion, 2.75 times higher than the offer size.

In a text message to reporters, National Treasurer Rosalia de Leon said said the auction saw a strong demand from investors as the market was looking for higher yields.

“Auction saw interest on intermediate part of curve driven by search for yields,” she said.

A bonds trader also said rates were within the expectations of the market.

“Rates were within market expectations but on the lower end. It was oversubscribed by only over 2.5 times maybe players prefer shorter tenors,” the trader said.

Given the strong demand for the securities, de Leon said the auction committee decided to open the tap facility to raise an additional P10 billion for the offering.

This year, the government is programmed to borrow P3.03 trillion from domestic and external sources to bridge the deficit in its budget, which is expected to widen to 8.9 percent of the gross domestic product.

For January, alone, the BTr is targeting to raise P140 billion from domestic issuances.

Given its ramped up borrowing activities, the Philippines’ outstanding debt is seen to hit P11.98 trillion by the end of the year, translating to a debt-to-GDP ratio of 58.1 percent.