Gov’t makes full award of 7-year Treasury bonds, raises P25B

The national government raised P25 billion from the full award of all seven-year Treasury bonds at auction on Feb. 28.

These were reissued securities with a remaining term of six years and two months, and fetched an average of 6.172 percent.

The resulting yield was 41.6 basis points lower than the average 6.588 percent recorded in the previous issuance in September 2022.

Tuesday’s resulting rate for the seven-year T-bond was 32.8 percent lower than the original coupon rate of 6.5 percent, set on its first issue in May 2022.

On the other hand, Tuesday’s result was higher than corresponding rates for deals done at the secondary market.

The Bloomberg Valuation Service pegged the rates on corresponding corporate bonds at 9.4 bps lower or 6.078 percent, and on corresponding government securities at 14.8 bps lower or 6.024 percent.

The offering was oversubscribed by more than twice, with lenders making available a total of P58.6 billion.

“With its decision, the committee raised the full program of P25 billion, bringing the total outstanding volume for the series to P99.7 billion,” the Bureau of the Treasury said in a statement.

Rates for government securities have been rising amid continued hawkish signals from the United States Federal Reserve, themselves bolstered by “sticky” inflation figures.

These factors suggest greater attractiveness of US-dollar denominated securities compared to peso-denominated debt paper.

For this month of March, the Treasury plans to borrow P205 billion through the issuance of T-bills and Treasury bonds.

The domestic borrowing program for March includes P60 billion from T-bills and P125 billion or P25 billion each from six-year, seven-year, 10-year, 13-year, and 20-year T-bonds.