The Bureau of the Treasury’s (BTr) newly issued five-year treasury bonds gathered strong market demand, prompting the auction committee to open its tap facility.
The auction attracted tenders of P63.2 billion, more than thrice the P20 billion offering which was fully awarded yesterday.
“Given the huge demand in today’s auction, we saw that there are a handful of bids unserved at the 4.25 percent level, so we decided to open the tap for P10 billion,” Erwin Sta. Ana, deputy treasurer, said after the auction held in the BTr office in Manila.
“Normally you issue on a tap basis if you see excess demand coming from the GSEDs (government securities eligible dealers), so in this case that it was clear that (there was) more than three times bid to cover… so we felt like we can take the opportunity to open the tap,” he added.
The five-year paper fetched a coupon rate of 4.25 percent, 120.2 basis points lower than the previous average of 5.452 percent.
“(The auction result) was expected because we know that there will be liquidity… because of the RRR (reserve requirement ratio) cut and because of maturity of P197 billion so we expect it,” Sta. Ana said.
As for the P10 billion to be raised via the tap facility, Sta. Ana said the auction committee just looked at the bids at the cut off level, and the unserved demand is roughly around that area.
“One other reason is we would also like to cover for past rejections, just to fill in that hole in the previous auction,” Sta. Ana said.