Investors swarm T-bond auction

The Marcos administration was able to borrow its target amount of long-dated debt paper on Tuesday’s sale of Treasury bonds (T-bonds), which was met with strong demand from local creditors. The Bureau of the Treasury (BTr) raised its planned amount of P30 billion via 10-year T-bonds, which have a remaining life of nine years and two days. The offering was met with robust demand as total tenders amounted to P93.32 billion, 3.1 times larger than the original size of the issuance. READ: Gov’t accepts higher T-bond rates, raises P30B Investor appetite for the debt securities was so strong that the BTr opened its tap facility window to accommodate up to P10 billion more in excess demand. That, in turn, helped the government borrow at a lower cost. The T-bonds fetched an average yield of 6.251 percent, lower than the 6.326 percent quoted for the comparable tenor in the secondary market. But the rate was higher than the 5.890-percent rate seen during the last auction of 10-year T-bonds on Dec. 10, 2024. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said local rates tracked the correction of 10-year US Treasury yields, which fell to a three-week low after newly-sworn US President Donald Trump gave a clearer picture of some of his policies. “Trump will not unveil China-specific tariffs on his first day in office, instead ordered his administration to address unfair trade practices globally,” Ricafort said. For this year, the Marcos administration is targeting to borrow P2.55 trillion from creditors at home and abroad to plug a projected budget hole amounting to P1.54 trillion, or equivalent to 5.3 percent of the country’s gross domestic product. By sources of financing, the government will borrow P507.41 billion from foreign investors in 2025. The remaining P2.04 trillion is targeted to be raised domestically, of which P60 billion will be via short-dated Treasury bills and P1.98 trillion via T-bonds. All of this, in turn, is expected to push the government’s outstanding debt to P17.35 trillion by the end of 2025.

TAGS: Bureau of Treasury, t-bonds