Rate on 20-year T-bonds slumps to 3.625%

The coupon rate on 20-year treasury bonds fell by 212.5 basis points to a record-low 3.625 percent from 5.75 percent set in the previous issue following the persistent liquidity in the local financial market.

The coupon for Tuesday’s issue was also 42.5 basis points lower than the 4.05 percent prevailing in the secondary market.

Investors tendered a total of P118.3 billion, or more than four times the volume available. The government raised P25 billion as planned.

Deputy National Treasurer Eduardo S. Mendiola said in an interview that the auction results were “not surprising.”

“Rates have been going down (because) there’s so much liquidity out there, (we are) actually running after paper (to issue),” Mendiola said.

He said the Treasury would not accommodate more tenders through its over-the-counter facility.

Mendiola added that the recent showing of a strong appetite for government securities would not prompt the bureau to increase the volume of future offerings.

“We’ve already announced our second-quarter issuances and we will stick to that program,” he said.

In a notice to dealers of government securities issued earlier this month, National Treasurer Rosalia V. de Leon said the Treasury planned a total of P150 billion in domestic debt paper issuances in the second quarter.

The bureau has scheduled three monthly auctions of P12 billion in 91-day treasury bills, P18 billion in 182-day bills and P30 billion in 364-day securities.

The Treasury will also offer a batch of three-year bonds, another of seven-year paper and a third of seven-year securities—each worth P30 billion.

Last Monday, Finance Secretary Cesar V. Purisima said the government was looking at fully sourcing its financing needs from local lenders.

The government’s program for the borrowing mix in 2012 was 75 percent for domestic and 25 percent for foreign. The mix was at 60-40 a few years back, but the continued push for greater reliance on domestic borrowings in line with the government’s foreign currency-averse liability management program tilted the balance in favor of local debt.