Treasury raises P25B as T-bond yields go down

Inquirer file photo

The government was able to fully raise its target amount of long-dated local debts during Tuesday’s auction of Treasury bonds following the announced cuts to banks’ reserve requirement ratio (RRR) by the Bangko Sentral ng Pilipinas last week.

Auction results showed the Bureau of the Treasury (BTr) borrowed the full issuance of P25 billion via reissued 20-year T-bonds as total bids reached P44.1 billion, about 1.8 times larger compared to its original size.

The BTr said the 20-year debt paper, which has a remaining life of 19 years and eight months, fetched an average rate of 5.861 percent, much higher compared to the 5.75 percent quoted for the comparable 20-year debt note in the secondary market as of Sept.23, based on Peso Bloomberg Valuation Service Reference Rates data provided by the Treasury.

However, this was cheaper than the 6.198 percent recorded when it was last awarded on Aug. 28.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. said the lower average rate was mainly driven by RRR cut announced by the central bank last week.