Unfazed by high rates, gov’t fully awards reissued T-bonds

MANILA  -The government was able to borrow as planned during the auction of long-term debt paper on Tuesday despite the higher yield sought by creditors.

The Bureau of the Treasury was able to raise the target amount of P30 billion via its offering of reissued Treasury bonds (T-bond) with remaining life of six years and eight months.

The offer was met with strong demand, with total bids more than twice the original size of the offer at P60.9 billion.

However, that was not enough to bring down borrowing costs. Auction results showed the government still proceeded with its borrowing plan despite yields averaging 6.807 percent, higher than 6.675 percent seen in the last sale of seven-year T-bonds three weeks ago.

At the same time, the yield sought by lenders during the auction was more expensive than the 6.876 percent quoted for the comparable tenor at the secondary market as of November 7, Treasury data showed.

Analysts have said the Bangko Sentral ng Pilipinas’ sustained hawkish stance continued to push rates up. This could create a problem for a government that has to borrow money from creditors at home and abroad to bridge its projected budget gap, which is capped at P1.5 trillion this year.

Last month, the central bank hiked its policy rate by 25 basis points in an off-cycle decision meant to manage inflation expectations, all while leaving the door open for a possible hike at the November 16 meeting.

The Marcos administration plans to borrow P225 billion from domestic lenders in November. Of that amount, P75 billion will be raised via Treasury bills while P150 billion will come from sale of T-bonds.