P15B worth of reissued T-bonds sold

Amid strong demand and a lower yield, the Bureau of the Treasury yesterday sold all P15 billion in reissued five-year T-bonds and offered additional over-the-counter IOUs.

Tenders for the debt paper with a remaining life of four years and three months hit P48.857 billion, making the auction more than thrice oversubscribed.

The securities were awarded at an average rate of 7.003 percent, which the Treasury said in a statement was “below current benchmark.”

The annual rate was also lower than the 7.342 percent during the previous reissuance last month.

To date, the outstanding volume from this treasury bond series amounted to P61.8 billion.

National Treasurer Rosalia V. de Leon told reporters after the auction that the robust demand came on the back of expectations that inflation was already on a downward, while investors bought IOUs before auctions wind down toward the end of the year.

As such, De Leon said the Treasury also opened the so-called tap facility from 2-4 p.m. to sell an additional P15 billion in five-year bonds to the 10 “market makers” among government securities eligible dealers (GSEDs).

The Treasury last embarked on tap facility offering in January last year.

Unlike in regular auctions where interest rates on short-term bills and long-term bonds are determined based on banks’ bids, the rates on debt instruments sold over-the-counter are set by the Treasury based on secondary market yields.