Rosalia de Leon
The Bureau of the Treasury on Tuesday raised P35 billion from reissued 20-year bonds amid high demand from domestic investors leaning toward securities with longer tenors.
The treasury bonds maturing in September 2040 fetched an average annual rate of 5.084 as bid rates hit a high of 5.19 percent and a low of 4.974 percent.
The auction was 1.5 times oversubscribed as tenders amounted to P61.9 billion.
On top of the strong reception, bids were aligned with the secondary market levels, which yielded positive real rates, National Treasurer Rosalia de Leon said after the auction.
As such, De Leon said the Treasury opened its tap facility window to sell another P5 billion of the T-bonds first issued in 2015.
To date, this T-bond series has a total outstanding volume of P177.6 billion.
De Leon attributed the robust demand for debt paper with longer maturities to market expectations that inflation “will be tamed going into next year.”
As of end-April, headline inflation averaged 4.5 percent, above the government’s 2 to 4 percent target range, no thanks to expensive pork as well as elevated fuel and transport prices.
De Leon said they were closely watching market appetite and real rates to see if a domestic liability management exercise could be offered by the second half of the year.
On Monday, the Treasury sold P21 billion in short-dated T-bills as P7 billion of each of the three tenors, higher than the P5 billion each as programmed, were awarded.
De Leon said T-bill rates fell across the board due to “small” supply, since the weekly offering had been reduced to P15 billion this month from P25 billion in April and May.
“The Treasury reduced the bills’ volume and increased the bond offerings as investors are now looking for yield picks from longer tenors,” De Leon said after Monday’s auction.
For June, the Treasury will offer T-bonds weekly, more frequent than the twice a month action in the previous two months.
The Treasury had programmed to borrow P215 billion—P75 billion in T-bills and P140 billion in bonds—from the domestic debt market this June.