THE GOVERNMENT made a full award of Treasury bonds (T-bonds) it auctioned off on Tuesday as the tenor’s average rate was close to the secondary market level.

The Bureau of the Treasury (BTr) borrowed P35 billion as planned via the reissued seven-year securities it auctioned off as total tenders reached P55.62 billion, making the offer more than 1.5 times oversubscribed.

The debt papers, which have a remaining life of six years and six months, were awarded at an average rate of 4.689%, up by 22.1 basis points (bps) from the 4.468% quoted when the series was last awarded on Oct. 26, 2021.

The average yield fetched for the debt papers was also slightly higher than the 4.6788% quoted for the seven-year 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.

Amid strong demand and with the tenor’s average rate close to the secondary market level, the BTr opened the tap facility to raise another P5 billion via the securities.

National Treasurer Rosalia V. de Leon in a Viber message to reporters said the Treasury made a full award of the reissued bonds as there was a decline in the submitted rates from those seen when the series was last offered.

The highest rate submitted when the same bonds were offered on Jan. 4 was 5.2% compared with the 4.75% on Tuesday, she said.

“(The) average tracks secondary level,” Ms. De Leon added.

At the Jan. 4 auction, the Treasury rejected all bids for its P35-billion offer of the same seven-year T-bonds even as tenders reached P41.42 billion. Had it made a full award, the tenor would have fetched an average rate of 4.814%.

Meanwhile, a bond trader said the market is mainly looking at the US Federal Reserve’s meeting on Jan. 25-26.

“The Fed is expected to have a hawkish tone as they may set the rest of the year for rate hikes.”

The Fed is widely expected to raise rates three times this year starting as early as March, median forecasts from a Reuters poll showed.

The Treasury plans to raise P200 billion from the domestic market this month, or P60 billion via T-bills and P140 billion from T-bonds.

The government borrows from local and external sources to help fund a budget deficit capped at 7.7% of gross domestic product this year. — J.P. Ibañez