The Bureau of the Treasury on Wednesday awarded all P35 billion in reissued five-year bonds it offered at a lower rate after investors got clarity on the US Federal Reserve’s tapering plans.
The debt paper with a remaining life of four years and seven months was sold at 2.746 percent, down from 3.295 percent when it was reissued in May.
When it was first issued in April, it fetched a coupon of 3.375 percent.
National Treasurer Rosalia de Leon attributed the lower yield to the market reaction to US Fed chair Jerome Powell’s Jackson Hole speech last week which provided guidance on the looming Fed taper or winding down of asset purchases like bonds.
De Leon noted that Powell said the taper would be decoupled from an interest rate lift-off.
Fed rate hikes likely in 2023
While the Fed’s tapering plans would likely be announced before this year ends, rate hikes were projected to take place much later or by 2023.Wednesday’s auction attracted P76.2 billion in bids, or more than two times bigger than the offering.
To date, the Treasury has so far raised P120 billion from this bond series.
The Treasury also opened its tap facility window to sell another P5 billion worth of these bonds to the 11 government securities eligible dealers-market makers.