Treasury sells P9B in 10-year bonds

THE Bureau of the Treasury (BTr) offered over the counter another P9 billion worth of the 10-year T-bonds that were auctioned off on Tuesday amid strong demand.

From time to time, the BTr sells securities through its tap facility especially when demand is high. This will also allow buyers to adjust their bids according to auction results.

During the auction earlier this week, the T-bond issue was oversubscribed by more than three times with investors offering to buy P28.247 billion worth of bonds.

According to Deputy Treasurer Eduardo S. Mendiola, the additional offer would be awarded on a pro-rata basis, meaning that the debt paper will be distributed to progressively higher bids until the full amount is met.

On Tuesday, the BTr awarded the bonds to those who offered interest rates of 5.135 percent to 5.194 percent.

The T-bonds earn 5.75 percent every quarter as well as 5.157 percent upon maturity in November 2021. This offering is a re-issue of the debt paper that was first floated two months ago, such that it has a remaining life of nine years and 10 months.

National Treasurer Roberto B. Tan said the government needed to redeem P91 billion worth of securities in February.

Tan said that while the maturing securities are covered by the BTr’s bond sinking fund, the largeness of the amount may be a basis for another offering of retail T-bonds.

The BTr is required to maintain a reserve that ensures there is enough fund to redeem maturing bonds.

“It is a big amount (and) a result of previous debt exchanges,” Tan said, referring to BTr programs that swap new bonds with outstanding ones as a means to push forward the date of maturity and as to raise new funds.

Regarding the healthy investor appetite for T-bonds, Tan said this might be partly due to expectations that monetary authorities would ease key interest rates by 25 basis points on Thursday when the Monetary Board meets.

He said the credit rating downgrade of several countries in the European Union might drive capital to countries like the Philippines.