The Bureau of the Treasury (BTr) fully awarded bids for the reissued 10-year treasury bonds yesterday as demand surged more than three times the initial offer.
The Treasury bonds, with a remaining life of nine years and four days, saw total tenders reaching P93.32 billion.
This encouraged the BTr to fully award the amount of P30 billion as planned.
The government securities maturing in January 2034 fetched an average rate of 6.251 percent.
Bids ranged between 6.22 percent and 6.27 percent.
The comparable Bloomberg Valuation Service rate stood at 6.326 percent for the 10-year tenor.
“Long-term yields are rising due to higher government debt and the rise of 10-year US Treasuries as well as rising inflation expectations,” said Jonathan Ravelas, senior adviser at professional service firm Reyes Tacandong & Co.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, pointed out that the 10-year treasury bond average auction yield at 6.251 percent was higher by 36.1 bps vs. the 5.89 percent in the previous 10-year T-bond auction more than a month ago as the benchmark 10-year U.S. Treasury yield hovered in the 7.5-month high recently.
“(This is) partly due to the possible Trump protectionist measures that could lead to higher US import tariffs, higher inflation, wider budget deficits and fewer Fed rate cuts,” Ricafort said.
Meanwhile, Chelsea Vanessa Lim, fixed income portfolio manager at Sun Life, said increased appetite for the (10-year) duration after US President Donald Trump’s inauguration and attractive valuations of local government bonds are the main factors that contributed to the strong demand seen in yesterday’s auction.
“Prior to the auction, we saw yields of 5- to 10-year bonds drop by seven to 12 bps, tracking the overnight move in US Treasuries,” Lim said.
“The yield curve continues to see further steepening as upside risks to inflation keep market participants cautious on adding duration and therefore, more heavily positioned on short duration securities,” she added.