Treasury bureau raises P15 billion as planned from 5-year T-bonds

The government raised its targeted amount of longer-dated borrowings during Tuesday’s sale of Treasury bonds (T-bonds), accepting the higher yield that local creditors called amid risks that the easing cycles of central banks will go slower.

In a statement, the Bureau of the Treasury (BTr) said it was able to borrow P15 billion, as intended, via reissued five-year T-bonds with remaining life of four years and five months.

READ: T-bill rates up for 8th week

Total tenders for the debt papers hit P55.8 billion, 3.7 times bigger than the original size of the offering.

Still, the robust demand for the T-bonds did not stop rates from going up. Auction results showed the debt securities fetched an average rate of 5.954 percent, jumping by 44.6 basis points from 5.508 percent recorded during the last offering of five-year T-bonds last Oct. 1.

Secondary market

Even then, the latest average yield matched the rate quoted for the same tenor in the secondary market as of Nov. 25.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said creditors demanded higher rates amid expectations of “fewer” rate cuts by the US Federal Reserve, a pace that could be matched locally by the Bangko Sentral ng Pilipinas (BSP).

Last week, BSP Governor Eli Remolona Jr. had floated the possibility of an “easing pause” at the Dec. 19 meeting of the Monetary Board, citing persistent price pressures.

Weak peso

Analysts, meanwhile, had said a weak local currency that skidded to the record-low 59:$1 level might prompt the BSP to defer its next rate cut to temper capital outflows.

“[Donald] Trump’s win could lead to more protectionist policies that could result in higher US inflation, wider budget deficits and fewer Fed rate cuts,” Ricafort said.

The Marcos administration aims to raise about P90 billion from the domestic market this month, of which P60 billion will come from short-date Treasury bills and P30 billion from T-bonds. INQ