Market snaps up treasury bonds as yield increases

THE BUREAU of the Treasury (BTr) fully awarded P25 billion in reissued three-year treasury bonds on Tuesday at a higher rate of P3.061 percent.

The treasury bonds maturing in May 2018 fetched an average rate that was higher by 55.1 basis points from the previous rate of 2.51 percent.

The auction was oversubscribed, with a total of P40.66 billion tendered for the debt paper.

National Treasurer Roberto B. Tan told reporters after the auction that the volume was “very healthy” and within the BTr as well as the market’s expectations, hence the acceptance of the full offer.

Tan said the higher average rate reflected a “rising trajectory” in interest rates thus far, while the T-bonds were first issued during a “very low interest rate period.”

A total of P75 billion in treasury bonds were programmed to be auctioned off during the second quarter, but the BTr rejected bids for P25 billion in re-issued 10-year debt paper last April due to bid rates higher than those in the secondary market.

Last month, the BTr accepted only P22.385 billion of the P25-billion reissued seven-year IOUs as the market was “quite passive and moving sideways,” Tan had said.

When asked if the BTr is planning to issue retail bonds this year, Tan said “there’s no compelling reason to do that.”

“We’re not in need of any jumbo financing,” he noted.

While the BTr is not eyeing a retail bond issuance, a debt swap is being planned by midyear. Tan said the BTr is still in the process of securing approvals for the debt exchange.

Tan earlier said that the BTr has already requested President Aquino to give his go-ahead for the planned peso-denominated debt swap, after which they will seek the approval of the Bangko Sentral ng Pilipinas’ Monetary Board.

Upon getting the approvals, the BTr shall solicit requests for proposals from the private sector to finally arrive at the “most attractive” proposal, Tan had said.

While the volume and the number of tenors are yet to be determined, the BTr wants a “benchmark-sized” issuance, Tan had also said.

According to Tan, a debt swap by the middle of the year is aimed at getting rid of illiquid ISINs in order to put more and more into deep-volume securities.