Gov’t raises P23.6B from reissued T-bonds auction

MANILA  -The national government made partial award  of Treasury bonds, raising P23.6 billion out of the P30 billion offered as hawkish signals from the United States Federal Reserve put upward pressure on the cost of borrowing.

The reissued seven-year T-bonds, with a remaining term of six years and two months, fetched an average of 6.299 percent.

The resulting average yield was 16.9 basis points (bps) higher than the average 6.299 percent recorded in the previous issuance last July.

Had the auction committee led by the Bureau of the Treasury made a full award, the average rate would have risen by 19.2 bps to 6.491 percent.

The resulting rate was, however, 53.2 bps lower than the original coupon rate of 7 percent, set on its first issue in October 2022.

Also, the latest average rate was lower than corresponding rates at the secondary market for government securities by 1.8 bps compared to 6.183 percent.

On the other hand, the latest average rate was higher by 1.1 bps than the 6.457 percent for corresponding corporate bonds at the secondary market.

“The auction was 1.4 times oversubscribed as total submitted bids amounted to P43.4 billion,” the BTr said in a statement.

“With its decision, the Committee raised P23.6 billion out of the P30 billion offering, bringing the total outstanding volume for the series to P145.4 billion,” it added.

In their latest monthly report, First Metro and UA&P Capital Markets Research said global bond markets became skittish again in June after some hawkish statements by US Fed officials.

They said the market for fixed income securities has priced in a 0.25 percentage point policy rate increase in US federal fund rates last July.

However, the latest Philippine auction results seem to counter their expectations that Philippine T-bond yields will not increase much.

“Local bond players seem also reacting to the 25-bps Fed rate hike, and as it does so, we don’t expect much upward movement in local government securities,” they said.