Demand for long-term debt securities rises

MANILA, Philippines — Demand for long-term government securities picked up yesterday, allowing the government to borrow another P35 billion in Treasury bonds (T-bonds) at lower rates than secondary markets.

The Bureau of the Treasury fully awarded P35 billion worth of reissued 14-year T-bonds on offer. The T-bonds fetched an average yield of 6.894 percent from a low of 6.75 percent and a high of 6.949 percent.

The rate was 8.8-basis-point lower than the BVAL Reference Rate, which is the standard for securities, of 6.982 percent for the 14-year bond.

This is also lower than the original coupon rate of 8.125 percent when the T-bonds were first issued.

Demand for the securities attracted P93.998 billion, oversubscribing the auction by 2.69 times. Maturity date of the offer is set on Dec. 16, 2035.

“We saw a repeat of strong interest on long end, with attraction of yield pick up. Rates were lower than secondary and the market did not ask for any maturity or illiquidity premium,” National Treasurer Rosalia de Leon said.

The Treasury also opened the tap for P10 billion on strong volume demand and reasonable rates.

De Leon said the borrowing program for August would likely include long tenors given the past auction results.

The Treasury has yet to release the schedule of T-bills and T-bonds offering for next month.

De Leon said the government is inclined to always stretch maturity subject to a reasonable rate.