Investor confidence boosted sale of 20-year bonds – Treasury
INQUIRER FILE PHOTO
MANILA — Market confidence in the economy helped the government sell P15 billion in new 20-year T-bonds Tuesday, the Bureau of the Treasury said.
The treasury bonds offering attracted P28.037 billion in tenders, making the auction almost twice oversubscribed.
The IOUs maturing on May 18, 2037 were fully awarded at a coupon of 5.25 percent, a rate which the Treasury said was “in line with market expectations.”
In a statement, the Treasury said the issuance was “met with healthy demand considering the long tenor of the bonds.”
It was the first time since 2013 that the Treasury issued 20-year debt paper, Deputy Treasurer Erwin D. Sta. Ana told reporters after the auction.
“Despite that this is on the longer sector of the curve, we’re actually pleased with the healthy turnout—that means there’s investor confidence in the Republic,” Sta. Ana said.
Also, market participants had been waiting for the Treasury to issue government securities on the longer end of the curve, Sta. Ana added.
As domestic interest rates remain relatively low, the Duterte administration wants to finance its programmed wider budget deficit equivalent to 3 percent of the gross domestic product in the next six years through a borrowing mix of 80-percent local and 20-percent foreign.
The programmed deficit was widened to ramp up government spending on infrastructure under President Duterte’s 10-point socioeconomic agenda aimed at slashing the poverty incidence to 14 percent by 2022 from 21.6 percent in 2015.
Last month, economic managers unveiled the administration’s “Dutertenomics” thrust of “Build, Build, Build” that they claimed would usher in a “golden age of infrastructure.”
The government plans to roll out over P3.6 trillion in public infrastructure projects from 2018 until 2020 while also jacking up to 75 from 55 previously the number of so-called flagship, “game-changing” projects that the administration aims to start and complete before 2022.
A total of P8-9 trillion will be spent by the Duterte administration in the next six years to build vital infrastructure such that the share of infrastructure spending to GDP will rise from 5.3 percent this year to 7.4 percent in 2022. SFM
