Gov’t raises P30B from reissued T-bonds

The Bureau of the Treasury raised P30 billion from reissued 10-year bonds on Tuesday, its last domestic fundraising foray for the year 2020 marked by a pandemic-induced recession that brought about challenges to finance the fight against COVID-19.

The bonds with a remaining life of six years and four months fetched an average annual rate of 2.791 percent, down from its 4.75-percent coupon.

Investors tendered P70.5 billion for the IOUs maturing on May 4, 2027, making the auction 2.3 times oversubscribed.

National Treasurer Rosalia de Leon said Tuesday’s auction attracted not only a big bid volume but also lower bid rates compared with secondary market yields.

“We saw interest shift to the belly of the curve for yield pickup as our government securities auction wrapped up for the year,” De Leon said.

On top of the full award, the Treasury opened its tap facility window to sell another P10 billion of the bonds to 11 government securities eligible dealers.

To date, the Treasury sold P94.9 billion of this bond series.

As the government relied heavily on the local debt market to beef up its COVID-19 war chest, De Leon admitted that “higher domestic funding presented a big challenge.”

“However, supportive monetary policies, notably from policy rate and RRR (reserve requirement ratio) reductions infused needed liquidity and checked unwanted steepening of yield curves,” De Leon said, referring the Bangko Sentral ng Pilipinas’ aggressive monetary easing amid the pandemic to support the economy.

“Of course, markets’ continued bias toward safe haven provided strong bid-to-cover for government securities. Inflation remained within the target band, preventing an uphill climb in rates,” De Leon added.

As of November, the volume of outstanding locally issued IOUs hit a new high of P6.65 trillion—P5.69 trillion in bonds and P951.5 billion in bills—from P6.54 trillion a month ago.

The government had programmed to borrow a total of P3 trillion from domestic and foreign sources this year to better finance the costly and protracted fight against the health and socioeconomic crises inflicted by the COVID-19 pandemic. INQ