The Bureau of the Treasury (BTr) conducted a dual-tranche Treasury bonds auction on Wednesday, which ended with mixed results.
The auction fully awarded bids for the reissued 3-year IOU but granted a partial award for the 25-year paper.
The BTr raised a total of P35.1 billion for the two-tenor auction, compared with the P40 billion program.
The three-year securities, with a remaining term of two years and 10 months, yielded an average rate of 5.76 percent, which is lower than the Bloomberg Valuation Service (BVAL) rate of 5.792 percent.
The auction was two times oversubscribed, with total tenders amounting to P40.7 billion, of which the full program of P20 billion was accepted.
For the 25-year IOUs, with a remaining maturity of 24 years and seven months, the BTr was able to partially award P15.1 billion out of the P20 billion offering at an average rate of 6.649 percent.
The auction received a total of P22.6 billion in tenders, or was oversubscribed by 1.1 times.
The accepted average was slightly higher than the BVAL rate of 6.648 percent for the 25-year tenor.
Had a full award been made, the yield would have reached 6.693 percent.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, cited the following factors for the 25-year Treasury bond results: higher long-term US Treasury yields recently due to US fiscal and debt concerns amid US President Donald Trump’s tax plan.
Ricafort said the similar 20-year US Treasury yield is at 4.83 percent, and is among four-month highs.
Ricafort said that after the announced tentative ceasefire between Iran and Israel, global crude oil prices declined to new two-week lows, erasing all of the increase in global crude oil prices since the Israel-Iran attacks started. “Thereby a positive development, as this could lead to some rollback in local fuel pump prices after the recent increase, as lower global crude oil prices and lower US dollar/peso exchange rate at new one-week lows would help ease the recent pressure on imported prices and overall inflation,” Ricafort said.
