Connect with us

Hi, what are you looking for?

News

Gov’t fully awards T-bonds amid strong demand

BW FILE PHOTO

THE GOVERNMENT fully awarded the reissued 10-year Treasury bonds (T-bonds) it auctioned off on Tuesday at a lower average rate as investors expect inflation to ease towards the end of the year.

The Bureau of the Treasury (BTr) raised the programmed P35 billion from the reissued 10-year papers on Tuesday as bids for the offering reached P93.696 billion.

The bonds, which have a remaining life of nine years and seven months, were awarded at an average rate of 5.913%, with accepted yields ranging from 5.749% to 5.99%.

The average rate of the tenor was 79 basis points (bps) lower than the 6.703% quoted for the series when the issue was first offered on Sept. 13, 2022. It was also 83.7 bps below the 6.75% coupon for the issue.

It was likewise 22.6 bps lower than the 6.139% seen for the same bond series and 23.1 bps below the 6.144% quoted for the 10-year paper at the secondary market prior to the auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

“The Auction Committee decided to fully award the reissued 10-year Treasury Bonds (FXTN 10-69) at today’s auction. With 9 years and 7 months to maturity, the security fetched an average rate of 5.913%, lower than the previous 10-year auction rate as well as the secondary market benchmark,” the BTr said in a statement on Tuesday.

“The auction attracted P93.7 billion in total tenders, reaching 2.7 times the P35.0 billion offer. With its decision, the committee was able to raise the full program of P35.0 billion, bringing the total outstanding volume for the series to P80.0 billion,” it added.

A trader said in a Viber message that the BTr made a full award of its offer amid strong demand as “investors try to lock in rates in anticipation of aggressive drop in inflation.”

Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla on Monday said they expect headline inflation to be below 4% by the third quarter of this year and below 2% by early 2024.

Inflation accelerated to 8.1% in December from 8% in November and 3.1% in December 2021 amid soaring food prices. This brought average inflation in 2022 to 5.8%, the highest in 14 years and well above the BSP’s 2-4% target.    

The Monetary Board raised borrowing costs by a total of 350 bps in 2022 to tame inflation and support the peso, bringing the policy rate to a 14-year high of 5.5%.   

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the average rate quoted for the issue tracked the decline in secondary market yields.

“Relatively large demand or bids for the National Government bond sales over the past two weeks also led to the lower auction yields,” Mr. Ricafort added.

Tuesday’s T-bond auction was the last government security offering for this month.

The BTr borrowed P212.4 billion from the domestic market in January, higher than its P200-billion plan.

Broken down, it raised P58.4 billion through Treasury bills out of the programmed P60 billion and P154 billion via T-bonds, higher than the planned P140 billion as it opened its tap facility several times to accommodate strong demand for higher-yielding long tenors.

The government borrows from domestic and external sources to finance its budget deficit, which is capped at 6.1% of gross domestic product for this year. — Aaron Michael C. Sy

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Editor’s Pick

<?xml encoding=”utf-8″ ??> With the increased threat of industrial strike action looming across the UK, we consider whether a force majeure clause can strike...

Editor’s Pick

<?xml encoding=”utf-8″ ??> TSB’s 5,700 staff and executives are to share a 10% bigger bonus pot this year, after rising interest rates pushed the...

Editor’s Pick

<?xml encoding=”utf-8″ ??> NatWest is to shut another 23 branches in England and Wales, adding to a raft of high street banking closures already...

Editor’s Pick

<?xml encoding=”utf-8″ ??> Shell has put more than 2,000 jobs in the UK at risk after launching a “strategic review” of its domestic energy...

Editor’s Pick

<?xml encoding=”utf-8″ ??> British taxpayers have become shareholders in a further 53 companies backed by a government rescue funding scheme. These firms include a...

News

REUTERS Smartphones were the most used devices among women last year based on a new survey by the Philippine Statistics Authority (PSA) and the...

You May Also Like

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.