Treasury raises P35 billion from new 10-yr bonds

MANILA, Philippines—The Bureau of the Treasury raised P35 billion from fresh 10-year bonds as local creditors flocked to Tuesday’s auction to park funds despite lingering risks from a looming interest rate hike in the US.

The Treasury set the coupon rate at 4.875 percent, which National Treasurer Rosalia de Leon said was below comparative yields in the secondary bond market.

Bid rates hit a high of 4.875 percent and a low of 4.87 percent.

The debt paper maturing on Jan. 20, 2032 attracted P72.24 billion in tenders, making the auction more than two times oversubscribed.

The Treasury offered another P5 billion, via the tap facility window, to the 11 government securities eligible dealers (GSEDs)-market makers.

De Leon said this latest bond offering “defied fears of Fed multiple increases.” The US Federal Reserve in December 2021 hinted it may jack up rates three times, starting March 2022, as inflation in the United States recently hit 40-year-highs.

According to De Leon, it helped that Bangko Sentral ng Pilipinas Governor Benjamin Diokno has been assuaging domestic financial markets that the BSP won’t hike policy rate from its current record-low 2 percent unless the economy was back on a solid recovery path.

Expectations of easing inflation also made long-term bonds more appealing to GSEDs, which needed to deploy their liquidity, De Leon added.

TSB