Gov’t makes partial award of 3-year Treasury bonds, raises P21.2B

MANILA  -The national government made a partial award of fresh three-year Treasury bonds, raising only P21.2 billion out of P30 billion planned amid weak lender appetite.

“The auction committee partially awarded the new 3-year Treasury bonds at today’s auction, setting the coupon rate at 6.250 percent,” the Bureau of the Treasury Tuesday said in a statement.

“The auction was under subscribed with total submitted bids reaching P29 billion,” the BTr said.

At the secondary market, the Bloomberg Valuation Service pegged the yield on three-year bonds lower at 6.204 percent.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., observed that Tuesday’s auction results showed an average yield of 6.222 percent.

This was higher by 33.9 basis points than the 5.883 percent in the previous three-year T-bond auction held last April.

Ricafort said results from the latest auction was partly due to the latest pick up in the headline inflation to 5.3 percent in August 2023 that ended a six-month run of disinflation from 8.7 percent in January to 4.7 percent in July.

Another factor was the spate of hawkish signals coming recently from officials of both the Bangko Sentral ng Pilipinas and the United States Federal Reserve, on the readiness to raise policy rates, if needed.

“The auction yield also went higher after global crude oil prices reached new 9.5-month highs or since November 2022 that led to the ninth straight week of local fuel pump price increases that could also add to inflation” and prompt a further increase in policy rates, Ricafort said.

He also noted the weaker position of the Philippine peso against the US, with the exchange rate at nine-month highs at about 56.80:$1, which could lead to higher importation costs and overall inflation.