Full award of T-bonds as rates drop

MANILA, Philippines — The Bureau of the Treasury secured P35 billion in long-term government securities, as rates went down even after the country’s inflation sizzled to a fresh 14-year high.

The Treasury yesterday made a full award of P35-billion worth of reissued 25-year T-bonds on offer with a remaining life of 11 years and 11 months.

The T-bonds fetched an average rate of 7.189 percent, just a basis point higher and almost matching the 7.179 percent BVAL Reference Rate, the standard for securities.

Rates went from a low of 6.9 percent and a high of 7.25 percent. The average rate was lower than the 9.25 percent rate when the T-bonds were first issued in 2009.

This was also lower than the 8.168 percent average when it was reissued last month.

“Full award with strong demand and significant decline in rates, with average mirroring secondary level even as November inflation settled at eight percent,” national treasurer Rosalia de Leon said.

She said the lower rates were due to expectations inflation has already peaked and as the central bank signaled the slowing pace of rate hikes moving forward.

Earlier, the Bangko Sentral ng Pilipinas dismissed more jumbo rate hikes after raising key policy rates by a total of 300 basis points.

Asked whether the government would eventually prefer longer tenors in its borrowing program, De Leon said: “If market pricing is good.”

So far, rates were lower for long-term securities rather than the T-bills or the short-term debt papers.

Meanwhile, the latest offering has a maturity date of Nov. 5, 2034.

Demand for the securities attracted P79.44 billion, oversubscribing the auction by 2.27 times, but was slightly lower than the previous 12-year offer that fetched P80.95 billion.

The Treasury is targeting to raise P105 billion in long-term debt papers this December. It has so far secured P58 billion.