Reissued Tbonds fully awarded at P30B; total bids P54.2B 

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Reissued 10-year bonds with a remaining term of seven years and eight months fetched P54.2 billion bids in Tuesday’s auction, resulting in the full award of the programmed P30 billion, the Bureau of the Treasury (BTr) said. 

The BTr said in a statement yesterday demand for government securities remained “healthy” as the day’s auction recorded 1.8 times oversubscription, even after Monday’s regular auction for all tenors of government securities was more than four times oversubscribed with tenders totaling P93.8 billion.

Analysts noted bidders’ interest centered mostly on short-term maturities. “Demand was flocking to short-term maturities because of expectations that long-term rates will rise, led by the 10-year US Treasuries, on rising upside risk and higher government debt dynamics,” Jonathan Ravelas, senior adviser at professional service firm Reyes Tacandong & Co., said.

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The full award at Tuesday’s auction brought the total outstanding volume for the series to P293.6 billion.

Government securities maturing in September 2032 fetched an average rate of 6.249 percent.

Bids ranged between 6.075 percent and 6.29 percent.

The comparable Bloomberg Valuation Service rate, however, stood at 6.158 percent for the seven-year tenor, making the average rate for the auctioned treasury bonds higher than the secondary market level. 

“The rate rose above the secondary market level because of optimism that economic growth will be better. Also, exciting corporate earnings have motivated investors,” Cid Terosa, senior economist at University of Asia and the Pacific, said, without specifying the companies. 

Terosa also expects rates to be higher for longer-tenor securities than for the near term, citing “favorable business and economic conditions and more steady inflationary conditions.”

Another analyst saw the local auction affected by the US trend in treasury yields. Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said the auctioned treasury bond drew a higher rate largely due to higher US Treasury yields, with the seven-year tenor at around 5.5-month highs, mainly due to possible protectionist measures by US President-elect Donald Trump.

“The seven-year Treasury bond average auction yield is also higher after the Fed Funds Futures priced in fewer Fed rate cuts of about -0.30 in 2025, versus the Fed officials/Fed dot plot estimate of -0.50 for 2025 as of December 18, 2024, after mostly stronger US economic/jobs data recently,” Ricafort said. 

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