Gov’t debt cost falls as P30B raised from T-bond sale

MANILA, Philippines  —A decline in rates sought by creditors allowed the government to fully borrow its target amount of long-dated debt during Tuesday’s sale of Treasury bonds (T-bonds).

Auction results showed the Bureau of the Treasury (BTr) had raised the planned amount of P30 billion via its offering of T-bonds payable in seven years.

The offer was met with strong demand. According to BTr, the issuance attracted total bids amounting to P107.1 billion, 3.6 times larger than the amount that the government had planned to borrow onshore.

READ: Gov’t gross borrowings up 28.2% in Nov.

That, in turn, lowered the borrowing costs of the government. The seven-year T-bonds fetched an average rate of 6.094 percent, cheaper than the 6.807 percent seen in the last auction of the same tenor on Nov. 7, 2023.

At the same time, the average yield for the debt papers was lower than the 6.12 percent quoted for the comparable tenor at the secondary market as of Monday.

Sought for comment, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the average yield had dropped amid slowing inflation at home despite ongoing turmoil in the Middle East and shipping attacks that could push up global energy prices.

READ: Gov’t unveils P585-B local borrowing plan for Q1 2024

“The seven-year Treasury bond average auction yield eased amid easing inflation trend in recent months as global crude oil prices still lingered among six-month lows despite increased tensions at the Red Sea area,” Ricafort said.

Documents from the budget department showed the Marcos administration is planning to borrow P1.85 trillion onshore in 2024.

Of that amount, P51 billion will be raised via Treasury bills while P1.8 trillion will come from weekly auctions of T-bonds. INQ

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