Bureau of the Treasury
MANILA, Philippines — Rates on long-dated debt securities climbed during Tuesday’s sale of Treasury bonds (T-bonds) as creditors wait for the next policy decision of the Bangko Sentral ng Pilipinas (BSP).
The yields asked by lenders were so high that the Bureau of the Treasury (BTr) was only able to borrow P11.5 billion out of its target amount of P30 billion via reissued T-bonds, which have a remaining life of 14 years and 8 months.
The BTr said the 15-year T-bonds fetched an average rate of 6.950 percent, lower compared to the 6.987 percent recorded on April 16, 2024 when the Treasury rejected all bids for the comparable T-bonds.
But it was more expensive than the 6.90 percent quoted for the same tenor in the secondary market as of May 13, 2024.
Auction results showed rates went up amid decent demand for the issuance, which attracted total bids amounting to P36.7 billion, 1.2 times bigger than the original size of the offer.
READ: T-bond rate rises ahead of price data
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said creditors asked for higher yield as they wait for the decision of the BSP on May 16, which would take into account the faster inflation print in April and softer-than-expected economic growth in the first quarter.
This, as a volatile peso that sank to 18-month lows against a strong dollar would likely prompt the BSP to keep its policy rate unchanged at a 17-year high of 6.5 percent to stem capital outflows.
“The 15-year Treasury bond average auction yield is higher after the peso exchange rate went up to 18-month highs recently, [and] after mostly softer local economic data recently [that] could support possible local policy rate cuts if the Fed starts cutting rates later this year,” Ricafort said in a commentary.
The Marcos administration is planning to borrow P585 billion from local creditors in the second quarter of 2024–the same as the financing program in the first quarter. Under the plan, the government is targeting to raise P195 billion via short-dated Treasury bills and P390 billion via T-bonds.
Overall, the Department of Finance had announced a bigger borrowing plan for this year at P2.57 trillion—from the old program of P2.46 trillion—as the government raises funds to plug a bigger-than-previously-expected budget hole of P1.5 trillion. INQ