By Melissa Luz T. Lopez
Senior Reporter
THE GOVERNMENT raised P10 billion worth of reissued three-year Treasury bonds (T-bonds) yesterday as yields saw a minimal rise despite persistent concerns on domestic inflation and uncertainties in the global market.
The Bureau of the Treasury made a full award of the reissued debt papers, which have a remaining life of two years and nine months.
The decision came as offers reached P20.006 billion, double the amount which the government is eyeing to raise. The papers fetched a 4.632% average yield, just some five basis points higher than the 4.5838% rate at the secondary market prior to the auction.
The yield on the three-year bonds was steady as trading at the secondary market closed.
However, yesterday’s awarded rate inched up from the 4.25% coupon when the securities were first offered in January.
“I think three years is a happy spot for the market given the offering [yesterday] and the bids submitted, so we made a full award,” National Treasurer Rosalia V. de Leon told reporters after the auction.
“Still, inflation continues to be a persistent and nagging concern for the market,” the official said, noting that “unresolved issues” with the United States Federal Reserve are likewise weighing on sentiment.
The Fed raised benchmark rates by another 25 basis points last month, with officials hinting that successive tightening moves are to be expected within 2018.
Market players asked for rates ranging from 4.5-4.745% during Tuesday’s offering, which Ms. de Leon said was within her expectations.
The full award followed the state’s decision to make a partial award of Treasury bills last Monday. Only P3.265 billion worth of three-month papers were accepted, versus a P15-billion program that includes six-month and one-year papers.
Inflation has been on a steady ascent for three months, hitting a three-year peak at 3.9% in February amid rising fuel prices and higher commodity costs due to the tax reform law.
The Philippine Statistics Authority will report March inflation data on Thursday. A BusinessWorld poll yielded a 4.2% median forecast for the month, which compares to the 3.8-4.6% estimate given by the Bangko Sentral ng Pilipinas.
Sought for comment, a bond trader said investors likely crowded the three-year tenor as they prefer short-term placements given persistent market jitters.
“I think we’re still facing the same concerns — domestic inflation and supply of debt. Given those two things, most players have been wanting to stay on the front end of the curve,” the trader said in a phone interview.
“The Treasury is eyeing to raise P325 billion this quarter, there has to be discovery of price for that new supply.”
Starting this month, the Treasury will be holding two auctions per week — one for T-bonds and another for T-bills — to reflect increased borrowing requirements for the quarter.
The state plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product.

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