Declining rate prompted full award of T-bonds
INQUIRER FILE PHOTO
MANILA, Philippines — The Marcos administration was able to raise its target amount of long-dated debts during Tuesday’s sale of 10-year Treasury bonds after local rates tracked a decline in US Treasury yields.
Auction results showed the Bureau of the Treasury (BTr) fully awarded reissued T-bonds worth P30 billion, which have a remaining life of eight years and 11 months.
The offering attracted total tenders amounting to P60.2 billion, exceeding the original size of the issuance by two times.
READ: Gov’t raises P30B from T-bond offer amid lower yield
Apart from the strong demand, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the government was able to borrow as planned after domestic yields followed the downward movement in US rates.
Figures showed the benchmark 10-year US Treasury yield so far stayed below 5 percent.
As such, the reissued T-bonds fetched an average rate of 6.118 percent, lower than the 6.251 percent seen in the last auction of the comparable tenor on Jan. 21, 2025.
The average yield was also lower than the 6.127 percent quoted for the same tenor in the secondary market yesterday.
“The 10-year Treasury bond average auction yield is slightly lower after the comparable US Treasury yield eased to two-month lows recently after the Trump administration signaled that it would prioritize policies that would help reduce the benchmark yield instead of questioning Fed rate decisions,” 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.
