T-bond yield rises; Gov’t raises P15B

Bureau of the Treasury

The government was still able to borrow its target amount of longer-dated debt during Tuesday’s sale of 10-year Treasury bonds (T-bonds) despite the higher rates sought by creditors, which tracked the upward movement in US Treasury yields in the aftermath of Donald Trump’s election victory.

Auction results showed that the Bureau of the Treasury (BTr) had raised P15 billion via reissued T-bonds, which have a remaining life of nine years and one month.

The issuance was met with strong demand. The BTr said the T-bonds had attracted total bids amounting to P53.2 billion, exceeding the original size of the offer by 3.5 times.

READ: T-bill rates mostly rise ahead of inflation data

But despite the healthy amount of tenders, creditors still asked for higher yields. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the local T-bond rate had tracked the “net increase” in the comparable 10-year US Treasury yields “since the markets priced in a Trump victory.”

The BTr said the reissued T-bonds had fetched an average rate of 5.890 percent, slightly higher than the 5.870 percent seen in the previous auction of the same tenor last Oct. 29.

But it was lower than the prevailing 10-year secondary market benchmark rate of 5.945 percent.

“A Trump victory could lead to protectionist policies and higher US inflation, as well as fewer US Federal Reserve rate cuts,” RCBC’s Ricafort said.

For 2024, the Marcos administration has set a P2.57-trillion borrowing program for this year to bridge a budget deficit that is capped at P1.5 trillion, or equivalent to 5.7 percent of gross domestic product. INQ