P25B in treasury bonds awarded; market bullish

NATIONAL TREASURER ROBERTO TAN. INQUIRER PHOTO / GRIG C. MONTEGRANDE

A week after the “successful” national elections, investors swamped the T-bonds auction Tuesday, allowing the Treasury to fully award P25 billion in IOUs maturing in 2021 at a yield of 3.246 percent.

A total of P72.563 billion or almost thrice the offering was tendered for the reissued Treasury bonds at an average annual rate which National Treasurer Roberto B. Tan said was “very much within the interest range that we’re willing to accept.”

“It’s a very good start for the incoming new administration,” Tan said, citing that besides investor interest in government securities, the peso as well as the stock market also strengthened following the elections.

Tan also noted that it would be up to the next administration’s Senate leadership to ratify the country’s membership in the China-led multilateral lender Asian Infrastructure Investment Bank (AIIB), which President Aquino approved in December last year.

The Senate cannot ratify the country’s AIIB membership during the 16th Congress as they lacked time due to the elections.

The Philippines remains on observer status pending Senate ratification of its AIIB membership.

Tan said the incoming economic team would be briefed about the country’s prospective inclusion in the AIIB, adding that the Bureau of the Treasury had also prepared a transition report and was ready to meet with Duterte’s economic managers.

Also, Tan reiterated that the upcoming implementation of the Bangko Sentral ng Pilipinas’ interest rate corridor (IRC) starting June 3 would complement the Treasury’s T-bill and T-bond auctions.

“There will always be appetite for [Treasury IOUs] because the interest rate corridor is really on the shorter end of the curve for sovereign financial instruments,” Tan said, noting that the IRC’s term deposit auction facility will offer seven-day and 28-day term deposits.

“So the government will still be issuing [debt paper with longer tenors] since T-bills and T-bonds are complementary and they reinforce the yield curve from the shortest to the longest,” he added.