The Bureau of the Treasury (BTr) made a full award in its double offering of treasury bonds yesterday, encouraged by significant interest from investors that allowed the government to raise a total of P35 billion.
The twin offering comprised of the reissued T-bonds and the newly issued 25-year bonds, both of which attracted heavy demand from a highly liquid market.
The reissued bonds with a remaining term of three years and two months, fetched an average rate of 5.894 percent, settling lower than the prevailing secondary market rate of 5.972 percent.
The auction was met with heavy demand, going nearly five times oversubscribed with total tenders reaching P74.6 billion.The BTr raised the full program of P15 billion, bringing theoutstanding volume for the series to P276 billion.
For the newly issued 25-year treasury bonds, the BTr awarded P20 billion with a coupon rate of 6.375 percent, similarly going below the secondary market benchmark of 6.434 percent.
The auction was also well received, with total tenders amounting to P46 billion or 2.3 times oversubscribed.
National Treasurer Sharon Almanza was asked by Malaya Business Insight why the government opted for a double treasury bond offering, and she said that “it’s part of (the government’s) borrowing plan for the quarter.”
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, mentioned several factors which may have influenced the auction results, such as the
possible BSP rate cut as early as February 13 based on earlier signals by local monetary officials, global crude oil prices which declined to new two-week lows, and as US Treasury yields corrected lower recently to near one-month lows.
“Recent government measures to further bring down rice prices in the local market would support relatively benign inflation within the BSP’s target range of two to four percent, thereby (it) could justify future local policy rate cuts that could match future Fed rate cuts, going forward,” Ricafort said.