Banks swamp long-term securities

MANILA  -The cost of six-year Treasury bonds (T-bonds) for the government decreased as lenders continued to favor longer-term securities over short-term ones amid anticipation of continued hikes in US interest rates while the Bangko Sentral ng Pilipinas is hinting of a pause this month.

On Tuesday, the government raised P25 billion as planned through the award of 10-year T-bonds that had been originally issued in January 2019.

With a remaining life of five years and eight months, the bonds fetched an average rate of 5.925 percent.

The resulting average rate was 95 basis points (bps) “lower than the original coupon rate of 6.875 percent set on its first issuance in January 2019 and current secondary market benchmark rates,” the auction committee led by the Bureau of the Treasury (BTr) said.

Also, the latest average was 24.7 bps lower than 6.172 percent recorded in the more recent issuance.

Further, Bloomberg Valuation Service pegged the rates on corresponding corporate bonds at 6 bps higher or 5.985 percent. Likewise with corresponding government securities at 10 bps lower or 6.025 percent.

The offering was oversubscribed by 2.5 times, with lenders making available a total of P61.8 billion.

“With its decision, the committee raised the full program of P25 billion, bringing the total outstanding volume for the series to P295 billion,” the BTr said.  INQ

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