Investors scramble for gov’t paper

The government securities market opened 2017 with a bang, as the Bureau of the Treasury’s first domestic borrowing for the year was oversubscribed and paved the way for an over-the-counter sale of bonds amid strong demand.

Also on Tuesday, National Treasurer Roberto B. Tan told reporters that the Office of the President had given its go-ahead for the planned global bond sale early this year.

It will be the first foray of the Duterte administration into the offshore market.

Tan said President Duterte allowed up to $2 billion in foreign borrowing through an issuance of ROP bonds, of which $500 million will be new money and $1.5 billion will be for liability management.

“We are already discussing with our banker-partners, that’s where we are,” Tan said when asked for details, although he said the tenor had yet to be firmed up.

In recent years, the Philippine government sold long-tenor bonds offshore during the first few months of the year.

On Tuesday, the Treasury auctioned P15 billion in new three-year debt paper maturing on Jan. 12, 2020.

Investors tendered a total of P37.238 billion, making the auction oversubscribed by over twice.

The Treasury awarded all IOUs it offered at an average annual yield of 3.364 percent, lower than the 3.375-percent coupon rate.

“The auction went very well; there was very good demand, very auspicious for the year, and there’s very good pricing also. So we fully awarded very much within the acceptance range that we had internally,” Tan said.

“I think markets are settling. Yields are going down compared to last month and the quarter before. So we are hoping for the best this year in terms of normalizing our auction and other capital market-generating activities,” he added.

As such, Tan said the Treasury opened the so-called tap facility until 3 p.m. today to sell another P15 billion in three-year bonds.

The Treasury last embarked on tap facility offerings in 2014.