Gov’t raises P26.6B from T-bond auction

MANILA  -The partial award of government securities on offer continued this week as the auction committee led by the Bureau of the Treasury raised only P26.6 billion out of the planned P30 billion.

With four years and seven months left until maturity of the Treasury bonds, the committee moved to cap the average rate at 6.337 percent. This was 8.7 basis points higher than the coupon rate of 6.25 percent that was set when the T-bonds were originally issued in March 2019.

Had the committee decided for a full award, the average rate would have jumped by 53.7 bps to 6.342 percent.

“The auction was 1.6 times oversubscribed with total tenders reaching P47.8 billion,” the BTr said in a statement.

“With its decision, the committee raised P26.6 billion out of the P30.0 billion offering, bringing the total outstanding volume for the series to P126.8 billion,” it added.

Also, the new average rate was higher than prevailing rates for corresponding deals at the secondary market

The Bloomberg Valuation Service pegged the rate on five-year corporate bonds at 6.287 percent or 5 bps lower.

Also, the rate on corresponding government securities was pegged at 6.253 percent or 8.4 bps lower.

The upward pull on five-year bond rates was felt after the United States Federal Reserve again raised their policy rate in July after pausing in June, on continued concerns about inflation lingering above their goal of 2 percent.

Meanwhile, market analysts believe that the Bangko Sentral ng Pilipinas will maintain their own policy rate at 6.25 percent when the Monetary Board meets on Aug. 17.

This is based on expectations that inflation in the Philippines is expected to have slowed down further for the six month in a row to below 5 percent in July.