Treasury makes full award of reissued bonds

THE GOVERNMENT fully awarded the reissued seven-year Treasury bonds (T-bonds) it auctioned off on Tuesday at a lower average rate amid strong demand for high-yielding longer tenors.

The Bureau of the Treasury (BTr) raised P25 billion as planned from the reissued seven-year bonds it offered on Tuesday as total bids reached P50.979 billion or over twice as much as the amount on the auction block.

The bonds, which have a remaining life of two years and 10 months, were awarded at an average rate of 5.883%, with accepted yields ranging from 5.8% to 5.939%.

The average rate of the issue was 91.3 basis points (bps) lower than the 6.796% quoted for the series when it was last offered on July 5, 2022 and 36.7 bps below the 6.25% coupon for the issue.

This was also 18.9 bps below the 6.072% seen for the seven-year tenor but 1.03 bps higher than the 5.8727% quoted for the same bond series at the secondary market prior to the auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The Treasury made a full award of its T-bond offer amid strong demand and as rates were lower than secondary market levels, National Treasurer Rosalia V. de Leon said in a Viber message to reporters after Tuesday’s auction.

The accepted rates were “well within expected levels as some of those who are looking for T-bills (Treasury bills), especially the rejected ones, wanted yield pickup,” a trader said in a Viber message.

“It’s interesting to note, however, that the one-year T-bill average yesterday was higher than today’s auction average,” the trader said on Tuesday.

The BTr on Monday raised P5 billion as planned from the one-year T-bills as bids reached P9.815 billion. The average rate of the one-year paper went down by 1 bp to 5.977% from 5.987% last week. Accepted yields were from 5.43% to 6%.

Tuesday’s T-bond offer was fully awarded as rates declined amid expectations of slower inflation in March, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted in a Viber message.

The Philippine Statistics Authority will release March inflation data on April 5, Wednesday.

A BusinessWorld poll of 16 analysts yielded a median estimate of 8.1% for March headline inflation, near the upper end of the 7.4% to 8.2% forecast of the Bangko Sentral ng Pilipinas (BSP) for the month.

If realized, this will be down from the 8.6% in February, but faster than the 4% print in March 2022.

March would also be the 13th straight month that inflation was above the BSP’s 2-4% target for the year.

The Treasury wants to raise P160 billion from the domestic market this month, or P60 billion via T-bills and P100 billion via T-bonds.

The government borrows from local and external sources to help fund its budget deficit, which is capped at 6.1% of gross domestic product this year. — AMCS