THE TREASURY raised an additional P15 billion through the tap facility. — BW FILE PHOTO

THE GOVERNMENT raised another P15 billion in fresh funds after opening a tap facility to accommodate excess demand from its Wednesday Treasury bond (T-bond) auction.
The Bureau of the Treasury made a full award of the P15 billion worth of five-year papers it offered through a tap facility that was opened from 2 to 4 p.m. for its market makers.
The papers received overwhelming demand from investors amounting to P50.976 billion, higher than the P48.857 billion received during the previous bond auction.
The five-year notes, which carry a coupon rate of 5.5%, fetched an average rate of 7.003%, which was based on the yield fetched during the bond auction.
The rate was 33.9 basis points lower than the 7.342% fetched during the last bond issuance of the same tenor on Oct. 9.
National Treasurer Rosalia V. De Leon said on Wednesday that the government opened a tap facility to accommodate the overwhelming demand it received during the bond auction.
“We saw very strong bids for the tap, and the rate is also something that is favorable to us,” National Treasurer Rosalia V. De Leon told reporters on Wednesday.
“For those who were not accepted but would want to accept at that rate, then they can avail of the tap facility.”
Market makers allowed to participate in the tap facility include Bank of the Philippine Islands, BDO Unibank, Inc., China Banking Corp., Citibank Philippines, Development Bank of the Philippines, Land Bank of the Philippines, Metropolitan Bank & Trust Co., First Metro Investment Corp., Rizal Commercial Banking Corp. and Security Bank Corp.
The Treasury last opened a tap facility in January 2017.
“We have that facility, it’s just we haven’t really availed of it. However, we saw really strong [and healthy] submissions,” Ms. De Leon added.
Meanwhile, a bond trader said the tap facility was oversubscribed as market participants found the rate good amid lower yields on US Treasuries and ahead of likely “tamed” policy tightening path from the US Federal Reserve.
“We saw some demand as yields might start to fall since the US Treasuries are now lower due to lower equities,” the trader said in a phone interview yesterday.
“We’re also expecting another rate hike from the Fed on December, but the future rate hikes might be tamed for 2019.”
The trader added that bids for the tap facility were slightly bigger than the previous bond auction as market makers were attracted to the yield.
“The facility was only for the 10 market makers but they also had the demand for those since the yield was good,” the trader added. — Karl Angelo N. Vidal