BTr locks in lower T-bond rates

MANILA,  Philippines  —Cheaper borrowing costs amid easing inflation allowed the Marcos administration to fully borrow its planned long-term borrowings during Tuesday’s sale of Treasury bonds (T-bonds).

Auction results showed the Bureau of the Treasury (BTr) raised its target amount of P30 billion via T-bonds, which are payable in 10 years.

The offer was met with strong demand. According to BTr, the debt securities attracted total bids amounting to P102.2 billion, 3.4 times bigger than the original size of the issuance.

Average yield for the debt paper stood at 6.218 percent, slightly cheaper than the 6.224 percent seen in the last auction of the same tenor last Dec. 5.

Inflation expectations

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said expectations of lower inflation helped the government lock-in cheaper borrowing rates. Latest government data showed inflation eased to 3.9 percent in December 2023, from 4.1 percent in November.

READ: PH December inflation eases to 3.9%

That was the first time in 20 months that price growth eased back to within the central bank’s 2 to 4 percent target range. The December print was also the lowest reading in 22 months.

“The 10-year Treasury bond average yield eased … amid the easing inflation trend toward the [Bangko Sentral ng Pilipinas’] target in view of higher base effects and relatively better weather conditions with an unusually lower number of typhoons in the country in 2023,” Ricafort said in a commentary.

Documents from the budget department showed the Marcos administration is planning to borrow P1.85 trillion onshore in 2024. —Ian Nicolas P. Cigaral INQ