Connect with us

Hi, what are you looking for?

News

Treasury makes full award of new 10-year bonds on strong demand

BW FILE PHOTO

THE GOVERNMENT fully awarded the fresh Treasury bonds (T-bonds) it offered on Tuesday on strong demand for higher-yielding instruments amid expectations of more rate hikes in the United States.

The Bureau of the Treasury (BTr) raised P35 billion as planned via the fresh 10-year T-bonds it auctioned off on Tuesday, with total tenders reaching P99.311 billion or almost thrice the amount on offer.

The debt papers were awarded at a coupon rate of 6.75%, just 15.02 basis points (bps) higher than the 6.6% quoted for the 10-year tenor at the secondary market before the auction, based on the PHP Bloomberg Valuation Reference Rates data provided by the Treasury.

This was likewise 14.1 bps above the 6.609% seen for the 10-year T-bond first issued on June 23 (FXTN 10-68) at the secondary market ahead of Tuesday’s auction.

Accepted rates ranged from 6.5% to 6.8% for an average of 6.703%.

To accommodate the high demand and take advantage of the relatively low rate seen for the bonds, the Treasury offered another P10 billion in the papers via its tap facility.

National Treasurer Rosalia V. de Leon said in a Viber message to reporters after the auction that the government made a full award of its T-bond offer as “strong demand kept rates within secondary market levels.”

This, “even with hawkish statements from the Fed (US Federal Reserve) and its commitment to bring inflation back to its 2% target,” Ms. De Leon said.

Traders said the auction result shows the market’s preference for longer tenors that have better returns.

“Results surprised as the coupon rate was at the lower end of expectations. There are speculations that inflation in the US may be nearing its peak already and this has improved sentiment for bonds,” the first trader said.

“Moreover, investors are seen stretching their duration in exchange for relatively higher yields,” the first trader said.

The second trader likewise said the auction result was “nothing surprising” as investors want longer tenors for yield pickup, with strong demand for 10-year papers also seen at the secondary market last week.

Fed Chair Jerome H. Powell last week said the US central bank is “strongly committed” to fighting inflation and needs to continue acting strongly to bring prices down.

The US central bank will meet to review policy on Sept. 20-21, where markets expect another aggressive hike. It has raised rates by 225 bps so far since March, including back-to-back 75-bp hikes in June and July.

The August US consumer inflation report is set to be released overnight. In July, consumer inflation in the US slowed to 8.5% from an over 40-year high of 9.1% in June.

At home, the Bangko Sentral ng Pilipinas (BSP) is also in the middle of tightening its policy settings to rein in rising inflation and has raised benchmark rates by 175 bps since May. The Monetary Board’s next meeting is on Sept. 22.

BSP Governor Felipe M. Medalla earlier said the central bank may need to respond if the Fed remains hawkish, as its spillover effects on the market, especially the peso, could affect inflation.

Headline inflation eased to 6.3% in August from 6.4% in July. This brought the eight-month average to 4.9%, higher than the central bank’s 2-4% target but still below its 5.4% forecast for the year.

Meanwhile, the peso on Sept. 8 logged a new all-time low of P57.18 against the dollar following six straight sessions of decline. It has since recovered and is now back at the P56 level.

The BTr wants to raise P200 billion from the domestic market in September, or P60 billion via Treasury bills and P140 billion through T-bonds.

The government borrows from local and external sources to help fund a budget deficit capped at 7.6% of gross domestic product this year. — Diego Gabriel C. Robles

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

News

PHILIPPINE STAR/ MICHAEL VARCAS WASHINGTON D.C. — The United States is seeking to form a coalition of countries to drive negotiations on a global...

News

Buildings are seen along EDSA in Quezon City. — PHILIPPINE STAR/ MIGUEL DE GUZMAN By Diego Gabriel C. Robles  THE WORLD BANK (WB) upgraded...

News

Heavy traffic is seen on the southbound lane of EDSA in Cubao, Quezon City. — PHILIPPINE STAR/ MIGUEL DE GUZMAN THE PHILIPPINE auto industry’s...

News

REUTERS THE BANGKO SENTRAL ng Pilipinas (BSP) may deliver a second off-cycle rate hike in early November when the US Federal Reserve is expected...

News

Vendors arrange their goods at a public market in Manila. — PHILIPPINE STAR/ RUSSEL A. PALMA THE ASIAN Development Bank (ADB) is planning to...

Editor’s Pick

With the reversal of the 1.25% rise in National Insurance Contributions happening on the 6th of November, employers across the nation have an opportunity...

You May Also Like

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...

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

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...

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.