The Bureau of the Treasury (BTr) fully awarded the five-year treasury bonds at Wednesday’s auction amid strong demand for the government securities.
In a statement, the BTr said the auction for the reissued bonds, with remaining term of five years and three months, was 2.7 times oversubscribed, with total tenders reaching P80.7 billion.
The BTr raised the full program of P30 billion.
However, the bureau opted to raise an additional P7 billion yesterday through the tap facility window.
Under the tap facility, which takes place from 2:00 to 4:00 pm on the same day, the BTr can accommodate some of the demand for the government securities. The reissued IOU fetched an average rate of 5.908 percent.
The comparable Bloomberg Valuation Service rate for the five-year tenor is 5.8949 percent.
“Fresh liquidity from the RRR (reserve requirement ratio) cut and the strong likelihood of a rate cut from the Bangko Sentral ng Pilipinas (BSP) this month contributed to the strong investor demand in this auction,” Chelsea Vanessa Lim, fixed income portfolio manager at Sun Life, said.
“In addition, given the heavier supply on the longer tenors (10Y and above), investors prefer to position in the belly of the curve at the moment,” she added.
John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the high tender amount suggests that banks and institutional investors have ample liquidity, which they are willing to invest in government securities, particularly at medium-term tenors.
“With the BSP potentially pausing or even easing monetary policy later in the year, some investors may be locking in current rates before a potential downward shift,” Rivera said.
“Global uncertainties, including US monetary policy direction and geopolitical risks, may have encouraged investors to park funds in risk-free government bonds, particularly in the intermediate-tenor range,” he added.
