THE GOVERNMENT partially awarded the reissued Treasury bonds (T-bonds) it offered on Tuesday as the tenor’s rate increased on concerns over inflationary pressures resulting from rising oil prices.
The Bureau of the Treasury (BTr) raised just P19.315 billion via the reissued seven-year T-bonds it auctioned off on Tuesday, less than the programmed P35 billion, even as the tenor attracted P57.215 billion in bids.
The notes, which have a remaining life of six years and nine months, fetched an average rate of 4.468%, 26.1 basis points higher than the 4.207% quoted when the series was last offered on Oct. 5.
Still, the average yield fetched for the seven-year papers on Tuesday was lower than the 4.519% quoted for the tenor at the secondary market prior to the auction, based on the PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System’s website.
Had the Treasury made a full award of its offer on Tuesday, the reissued bonds would have fetched an average rate of 4.584%.
National Treasurer Rosalia V. de Leon said in a Viber message to reporters after the auction that the government decided on a partial award of the papers to keep its yield aligned with rates at the secondary market.
Ms. De Leon said despite the partial award, the government has sufficient financing buffers as it took advantage of the low rates seen previously.
Improving revenue collections and additional official development assistance inflows will also support the government’s cash position, she added.
A bond trader said in a Viber message that the seven-year papers fetched a higher yield amid concerns over rising oil prices and its impact on inflation, as well as expectations of monetary policy tightening in other economies.
“Rising oil prices continue to contribute to inflationary pressures. High oil prices may also be a sign that economies abroad are recovering implied by the demand for oil. In turn, if recovery is evidenced by good economic data abroad then foreign central banks may decide to raise rates,” the trader said.
Global oil prices on Tuesday were driven up by strong demand in the United States, Reuters reported. Brent crude went up 13 cents or 0.2% to $86.12 a barrel, while US oil rose 5 cents or 0.1% to $83.81 a barrel.
The BTr is looking to raise P200 billion from the local market this month: P60 billion from weekly offers of Treasury bills and P140 billion from weekly auctions of T-bonds.
The government wants to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit seen to hit 9.3% of gross domestic product. — Jenina P. Ibañez