The Bureau of the Treasury (BTr) fully awarded the reissued five-year treasury bonds auctioned yesterday amid healthy market demand for the government IOUs.
The auction attracted tenders of P83.5 billion, nearly thrice the P30 billion offering.
Aside from fully awarding the entire offer, the auction committee also opened its tap facility to raise an additional P10 billion for the same tenor.
The sale of the government security fetched a rate of 4.018 percent, 20.9 basis points down versus the previous average of 4.227 percent.
“We had a good turnout today, obviously, 2.8 times oversubscribed. The average rate is lower than the coupon and the secondary market rate of the security,” Erwin Sta. Ana, deputy treasurer, said after the auction in the BTr office in Manila.
“(This is) primarily driven by the ongoing sentiment about the COVID-19 (coronavirus disease 2019) outbreak and of course the signals from the Fed and the BSP (Bangko Sentral ng Pilipinas) of possible cuts to support the economy, and then US Treasuries are still at the lower levels and then, I guess the overall sentiment of the market right now is risk off,” he added.
Sta. Ana explained that the sentiment on the COVID-19 outbreak affects the outcome of recent auction results as investors opt for flight to safety.
“Everybody wants to park their funds in safe assets and those are government papers, that’s why you can also see the US Treasury is declining. All other major markets that are government bonds are also going down, hence it’s basically the same in the local market,” Sta. Ana said. – Angela Lorraine Celis
