Investors swarm T-bonds but push up rates

The Bureau of the Treasury (BTr) on Tuesday made a full award of its 10-year Treasury bonds (T-bonds) even as the market demanded for higher yields, raising a total of P35 billion from the oversubscribed offering of these long-term securities.

The BTr’s latest offering of reissued bonds fetched an average rate of 6.258 percent per annum, which was below secondary market benchmark rates but still higher than the yield of 5.913 percent in the previous auction on Jan. 24.

“The auction attracted P92.3 billion in total tenders, reaching 2.6 times the P35-billion offer. With its decision, the committee was able to raise the full program of P35 billion, bringing the total outstanding volume for the series to P115 billion,” the BTr said further in a statement on Tuesday.

Sought for comment, Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort told the Inquirer that the yields were still among the 5.5-month lows, noting that the recent P283.711 Retail Treasury Bond (RTB) offering had siphoned off some of the excess liquidity from the financial system.

Reduced liquidity

To recall, the BTr concluded its latest offer of 5.5-year RTBs last Feb. 15, exceeding its target. Dubbed as RTB 29, it was the 29th in a series of special issuances that began in 2001.

Launched on Feb. 7, it was supposed to run until Feb. 17 but was cut short by two days after reaching the P250-billion cap, according to National Treasurer Rosalia de Leon.

Meanwhile, RCBC’s Ricafort also suggested that recent hawkish signals by the United States Federal Reserve System had led to higher yields. Locally, the Bangko Sentral ng Pilipinas is also expected to jack up key interest rates further in the near term to tame inflation.

Foreign exchange factor

“Relatively weaker peso exchange rate versus the US dollar recently to [become] among the weakest [level] for the peso in more than a month also partly led to higher Philippine peso BVAL (Bloomberg Valuation Service) yields as this could still support further local policy rate hikes to help stabilize the peso, import prices and costs and overall inflation,” the economist said.

The uptick in benchmark 10-year US Treasury yield to 3.81 percent, the highest in about one month and a half, also led to higher long-term peso BVAL rates, Ricafort added.

—Alden M. Monzon INQ