Treasury sell P20B in 3-year bonds at 4.75%

The Bureau of the Treasury on Tuesday sold all P20 billion in new three-year bonds it offered during the first auction for the third quarter as expectations of further easing inflation bolstered demand.

The debt paper maturing on July 4, 2022, fetched a coupon rate of 4.75 percent.

The auction was more than three times oversubscribed as bids reached P65.91 billion.

National Treasurer Rosalia V. de Leon told reporters after the auction that the healthy market demand for the IOUs partly came on the back of the additional liquidity in the system following the implementation of the 50-basis-point cut in all banks’ reserve requirement ratio (RRR) last June 28 on top of another 50-bp reduction by end-July.

Also, De Leon pointed to the expected slow down in headline inflation last month, which was projected by most analysts and economists to fall below 3 percent for the first time in one-and-a-half years.

“Given all these considerations, the bids came in much lower than even the secondaries, and it’s about 33-bps lower than the previous auction” of three-year treasury bonds, De Leon said.

Meanwhile, De Leon said they saw “strong appetite of Japanese investors” during the nondeal roadshow for the planned issuance of yen-denominated samurai bonds in Japan within the third quarter.

De Leon said the Treasury was looking to sell up to $1 billion worth of samurai bonds across three tenors ahead of the so-called “ghost” period among investors by the middle of August.

Earlier, the the Philippines raised 2.5 billion renminbi from its second foray in China’s panda debt market.

In March last year, 1.46 billion renminbi in three-year panda bonds were sold by the Philippine government for the first time in China at a yield of 5 percent.

The Bureau of the Treasury earlier wanted to sell a bigger volume of up to $500 million in renminbi-denominated securities for the second panda bond issuance.