4-year treasury bonds oversubscribed, get bids of up to P22.68B

MANILA, Philippines—The auction for the government’s four-year Treasury bonds on Tuesday was highly oversubscribed as banks, awash in cash, manifested strong appetite for the virtually risk-free debt securities.

Bids for the bonds reached P22.68 billion, more than double the government’s P9-billion offering.

Despite the oversubscription, the Bureau of the Treasury’s auction committee opted to stick to the P9 billion borrowing schedule, saying it had enough liquidity to meet immediate expenditure requirement.

For this week, the government is expecting around P10 billion worth of maturing Treasury bills and bonds.

The four-year bonds fetched a coupon rate of 4.875 percent, lower than the 5.2 percent registered in the last auction for the same securities held in May.

National Treasurer Roberto Tan said the oversubscription of the bonds manifested how highly liquid banks were. It also showed the confidence of banks and investors on the ability of the government to service maturing obligations, as the fiscal situation and the overall economy improves.

“The market is favoring some fundamentals of the economy,” Tan said in a press briefing after the auction. He also cited inflation, which has so far stayed within the government’s target.

The National Statistics Office earlier reported that the annual inflation rate averaged at 4.3 percent in the first half, staying on track of the full-year target ceiling of 5 percent.

Meantime, Tan said the Bureau of the Treasury has been considering the 15-year tenor for the global bonds it would issue soon under its debt consolidation program.

Under the program, the government issues bonds and offers these in exchange for previously sold bonds that are about to mature. The objective is to lengthen the average maturity of the government’s debts.

Last week, the government was able to exchange in the domestic capital market over P300 billion of newly issued bonds with those that were about to mature.

The government is eyeing to do another round of bond swap, this time at the international capital market and involving exchange of global or dollar-denominated bond.

Tan said the 15-year tenor is being considered given that the government has not much maturity by 2026.

“The 15-year tenor is a maturity that we currently do not have in the curve of [Philippine debt securities],” Tan said.

In another matter, Tan said the Bureau of the Treasury has yet to decide whether or not to sell retail treasury bonds anew.

There are P60 billion worth of previously issued RTBs that will mature this month, and the market is awaiting the decision of the Bureau of the Treasury of whether or not it will again sell RTBs.