Gov’t makes full award of re-issued Treasury bonds, raises P20B
MANILA -The government was able to borrow as planned during Tuesday’s sale of Treasury bonds (T-bond), as strong demand from creditors helped the Bureau of the Treasury (BTr) secure cheaper funds.
Auction results showed the BTr fully raised its target amount of P20 billion via the sale of re-issued 20-year T-bond, which has a remaining life of 15 years.
The offer attracted P71.3 billion in total bids, more than thrice the original amount offered to lenders. The strong appetite for the securities, in turn, brought down the borrowing costs for the government.
The BTr said the re-issued T-bond fetched an average rate of 6.593 percent, lower than the 6.927 percent seen last Aug. 23, when the government rejected all bids for the same tenor due to high yield sought by creditors at the time.
The rate was also lower than the 6.78 percent quoted for the comparable tenor at the secondary market as of Nov. 20 based on Treasury data.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said that apart from the “unusually high demand” for the long-dated debt paper, the recent moves by the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve also pushed down the auction rates.
READ: BSP keeps key policy rate at 6.5%
Last week, the BSP kept its key rate unchanged at 6.50 percent after latest data showed inflation started to ease at 4.9 percent in October, while economic growth was faster-than-expected in the third quarter at 5.9 percent.
Further easing the pressure on the BSP to hike was the Fed’s decision to hold interest rates steady for the second consecutive meeting three weeks ago.
The Marcos administration plans to borrow P225 billion from domestic lenders in November to help bridge a projected budget deficit of P1.5 trillion this year.
READ: Gov’t aims to sell P 225B worth of securities in November
Breaking down the borrowing program for this month, P75 billion will be raised via Treasury bills while P150 billion will come from sale of T-bonds.
