Treasury fully awards dual-tenor T-bonds at mixed yields at auction
THE PHILIPPINE government fully awarded its dual-tranche Treasury bonds on Tuesday, raising P35 billion as total bids hit P107.6 billion, almost three times the offer, amid concerns that the peso’s extended weakness could fuel inflation.
The Bureau of the Treasury (BTr) sold the programmed P20 billion in reissued 10-year bonds with a remaining maturity of six years and 10 months. Demand reached P70.7 billion, or 3.5 times the allotment.
The bonds carried an average yield of 5.74%, ranging from 5.72% to 5.758%, slightly below 5.798% at the auction on Oct. 21 and about a percentage point below the original 6.75% coupon.
The 10-year yield was 3.6 basis points (bps) higher than the closest benchmark seven-year bond and 2.4 bps above the pre-auction secondary market rate, according to PHP Bloomberg Valuation (BVAL) service data provided by the BTr. The sale increased the outstanding volume of the series to P525.6 billion.
Meanwhile, the government raised the planned P15 billion from 20-year T-bonds, with 18 years and six months remaining to maturity. Total bids reached P36.86 billion, 2.46 times the offer.
The bonds were awarded at an average rate of 6.51%, with accepted yields from 6.4% to 6.6%, up 8.9 bps from the auction on Sept. 23 and 36.5 bps below the original 6.875% coupon. The issuance brought the outstanding stock of the series to P244.6 billion.
A trader said demand was concentrated on the shorter to mid-maturity tenors.
“Lower yield on the seven-year bonds reflects generally lower yields across the board last month,” the trader said. “The 20-year yields were largely unchanged due to weaker interest at the long end.”
Yields finished mixed, with the long end anchored by investor caution amid inflation concerns linked to the peso’s sustained depreciation, Rizal Commercial Banking Corp. Chief Economist Michael Ricafort said in a Viber message.
The Treasury plans to tap the domestic market for P158 billion this month — P88 billion in T-bills and P70 billion in bonds — to fund a budget deficit capped at P1.56 trillion or 5.5% of gross domestic product. — A.M.C. Sy
