BTr awards P25B in 3-year T-bonds

The Bureau of the Treasury on Tuesday awarded the full P25 billion in reissued three-year treasury bonds at a higher rate of 3.089 percent.

The average rate for the bonds maturing on May 23, 2018 rose by 2.8 basis points from 3.061 percent during the previous auction.

A total of P62.897 billion was tendered for the debt paper, hence a bigger amount of bids worth P37.897 billion was rejected by the Treasury.

National Treasurer Roberto B. Tan told reporters after the auction that the average rate at which the T-bonds was awarded was “very much within internal estimates,” and even “more conservative” than an earlier poll of the market.

The Treasury will also auction P25 billion each in five-year and seven-year treasury bonds during the next two months.

Meanwhile, Tan reiterated that the Treasury wanted to undertake domestic liability management before any US Federal Reserve move to adjust interest rates, which is seen happening this coming September.

“One of the perils is the uncertainty. While we see that the US Fed is trying to be very gradual and predictive, you don’t know how investors will react. It could create volatility, especially when we’re approaching the expected date of Fed action,” explained Tan.

The Finance official nonetheless noted that the market was “apparently adjusting, based on predictions sent by the Fed.”

Tan said the Treasury was monitoring the market as well as getting feedback from financial institutions, after which it would decide if a liability management transaction could be activated within the year. Ben O. de Vera