Investors snap up T-bonds

The local market was undeterred by the Brexit vote as the auction for treasury bonds on Tuesday was more than thrice oversubscribed.

At its last scheduled auction for government securities in the second quarter, the Bureau of the Treasury fully awarded the P25 billion in four-year T-bonds it offered, for which a total of P84.1 billion was tendered by investors.

The reissued IOUs maturing on Aug. 20, 2020 were sold at an average annual rate of 2.698 percent, below the coupon rate of 3.375 percent.

“The auction committee decided for a full award of the reissued treasury bonds with remaining life of four years and one month on the back of strong demand for the security,” the Treasury said in a statement.

According to the Treasury, “bids aligned with market activity which was buoyed with expectations of unlikely further tightening from the US Fed following the ‘Brexit’ scenario and its expected impact on global growth,” referring to the United Kingdom’s vote to leave the European Union.

The Treasury said Tuesday’s auction generated “healthy participation” from both competitive as well as non-competitive bidders.

Deputy National Treasurer Erwin D. Sta. Ana told reporters after the auction that the Brexit vote so far had “minimal” impact on the domestic market for government debt paper, amid the country’s strong macroeconomic fundamentals.

Moving forward, the government plans to borrow P135 billion locally in the third quarter, similar to the volumes programmed during the first two quarters, National Treasurer Roberto B. Tan said last this week.

Tan nonetheless said the Treasury still had to seek incoming Finance Secretary Carlos G. Dominguez’s approval of the borrowing program for the initial quarter of the Duterte administration.