Investors swamp BTr with bids for long-term bonds

Yield on fresh 20-year Treasury bonds settled at an average of 5.906 percent with a coupon of 5.875 percent as investors rushed to acquire longer-term debt paper.

Tuesday’s yield was 212.5 basis points lower than the 8-percent coupon set for the previous 20-year T-bonds issued in July 2011.

That month, the Bureau of the Treasury swapped 10-year bonds for outstanding ones worth P67.83 billion, as well as 20-year bonds worth P255.84 billion.

For that offer, bondholders signed up for the exchange of P69.52 billion worth of 10-year bonds and P229.91 billion worth of 20-year bonds.

Also, Tuesday’s coupon rate was 10.6 basis points lower than the corresponding 5.981 percent for done deals in the secondary market.

Investors tendered a total of P41.475 billion, which was more than four times the government’s offer of P9 billion.

National Treasurer Roberto B. Tan said in an interview that buyers continued to prefer longer-term debt notes because of the benign inflation outlook for the year.

There is also “the expectation that international interest rates will continue to be quite low in the foreseeable future,” Tan said.

“It will continue to be a low interest rate regime, because the United States will continue to provide liquidity, while the European central bank is coming up with a permanent liquidity facility,” he added. “In the local front, the Bangko Sentral ng Pilipinas recently cut its policy rate by 25 basis points to 4.25 percent.”

Tan also said the government would issue a new tranche of retail Treasury bonds “possibly” this month.

He said that considering the market’s preference for long-term bonds, the new RTBs would probably have a tenure of at “at least 10 years.”

Last October, the BTr raised P110.1 billion following a weeklong offer of 10-year and 15-year debt paper. Of the amount raised, 10-year RTBs accounted for P54.97 billion, while the 15-year debt notes turned in P55.12 billion.