Investors hunt for higher yields to counter inflation fears

Amid robust demand, the Bureau of the Treasury on Wednesday awarded all P15 billion in reissued three-year T-bonds despite a higher rate.

The treasury bonds with a remaining life of two years and five months were sold at an average annual rate of 5.136 percent, up from 4.703 percent during the previous auction.

Investors tendered a total of P26.287 billion, making the auction 1.8 times oversubscribed.

In a statement, the Treasury said the full award came on the back of “strong market demand.”

The outstanding securities for the T-bond series first issued last January now stood at P49.9 billion, the Treasury said.

National Treasurer Rosalia V. de Leon told reporters after the auction the higher rate reflected an additional buffer sought by investors given expectations that inflation would still peak by September.

De Leon noted since the IOUs had a three-year duration, the market “would still provide that cushion, for purposes of avoiding market-to-market losses.”

As for the strong demand, de Leon explained the domestic market remained liquid due to inflows also coming from offshore.

“There’s liquidity but the preference continues to be on the shorter part of the curve,” de Leon said. —BEN O. DE VERA