The Bureau of the Treasury on Tuesday awarded all P30 billion in reissued five-year treasury bonds it offered amid a “risk-off” mood among investors.
The IOUs maturing on Oct. 17, 2024, fetched an average rate of 4.018 percent, which was below coupon and secondary market rates.
Bids reached P83.5 billion, making the auction nearly three times oversubscribed.
As such, the Treasury will sell an additional P10 billion of the debt paper through its over-the-counter tap facility “because we’ve seen unserved demand at the cutoff rate,” Deputy Treasurer Erwin Sta. Ana told reporters after the auction.
To date, the Treasury already sold P60 billion of this T-bond series.
Sta. Ana said that the lower rate was still “primarily driven by the ongoing sentiment about the COVID-19 outbreak and, of course, the signals from the US Federal Reserve and the Bangko Sentral ng Pilipinas of possible [interest rate] cuts to support the economy.”
“US Treasuries are still at the lower levels—I guess the overall sentiment of the market right now is risk-off,” Sta. Ana said.
According to Sta. Ana, the Treasury was “trying to maximize the funding that we can derive out of the local market, so we are not too pressured to actually raise funds offshore, given our bias for local funding.”
“The opportunity [for offshore commercial borrowings] is always there but, of course, in times like this, it’s kind of difficult to push the bar and issue offshore given the conditions,” Sta. Ana added.