The Bureau of the Treasury yesterday sold all P15 billion in reissued 10-year T-bonds it offered, and again opened the over-the-counter tap facility to raise at least another P15 billion from the 10 so-called “market makers” among government securities eligible dealers (GSEDs).
In a statement, the Treasury said there was “strong market demand” for the IOUs with a remaining life of nine years and three months, such that bid rates fell below the 10-year benchmark.
The full award was made at an average rate of 6.975 percent, up from the coupon rate of 6.25 percent when the debt paper maturing in 2028 was issued last March.
But the annual rate was down from 8.035 percent at the preceding reissuance last month.
Investors tendered a total of P49.4 billion, making the auction more than three times oversubscribed.
To date, the total outstanding amount for this treasury bond series was P52.1 billion.
The Treasury was initially scheduled to sell the IOUs on Dec. 11 but advanced it by one week.
For the third straight week, the Treasury also opened the tap facility window from 2 to 4 p.m. Tuesday to sell an additional P15 billion or more in 10-year bonds.
Under the guidelines issued last week, the tap facility was no longer capped, allowing the Treasury to determine the volume it will issue, National Treasurer Rosalia V. de Leon told reporters after the auction.
Unlike in regular auctions where interest rates on short-term bills and long-term bonds are determined by bids offered by banks, the rates on debt instruments sold over-the-counter are set by the BTr. The rates are based on secondary market yields.
The over-the-counter facility is usually tapped when the BTr decides to sell more securities to meet excess demand. The facility also allows the government to raise additional funds when money generated from regular auctions fall below targets.