THE GOVERNMENT made a full award of the fresh Treasury bonds (T-bonds) it auctioned off on Tuesday on the back of strong liquidity and benign inflation.

The Bureau of the Treasury (BTr) raised P30 billion as planned from its sale of fresh 10-year T-bonds out of total tenders worth P59.71 billion. The debt papers carry a coupon of 2.875%.

At the secondary market, the 10-year tenor was quoted at 2.788%, based on the PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System’s website.

National Treasury Rosalia V. de Leon said demand for government securities remained strong with the “market still awash with liquidity.”

Ms. De Leon said market participants likely priced in the latest inflation data reported Tuesday.

The Philippine Statistics Authority (PSA) said headline inflation picked up to 2.5% in June from the 2.1% logged in May. Still, this is slower compared to the 2.7% rate in June 2019.

The latest inflation print is faster than the 2.2% median estimate in a BusinessWorld poll conducted last week. It also fell closer to the higher end of the 1.9%-2.7% estimate given by the Bangko Sentral ng Pilipinas (BSP).

This brought the year-to-date average to 2.5%, well within the BSP’s 2-4% target for the year.

Moving forward, a bond trader said the market has its sights set on the government’s retail Treasury bond (RTB) sale next week.

“People will now shift focus on the RTB,” the trader said via Viber.

Ms. De Leon said they moved the start of the offer period to July 16, Thursday, from the July 15 announced earlier.

The official on Monday said the government will launch its second RTB sale this year next week to take advantage of low interest rates while providing the market with an additional investment outlet.

Ms. De Leon said the proceeds of the fundraising activity will support the national budget.

Other details regarding the RTB sale have not been released as of press time.

RTBs are offered to smaller investors and consist of low-risk, higher-yielding savings instruments backed by the National Government.

In February, the BTr raised a record P310.8 billion from its sale of RTBs, consisting of P250 billion from “new money” and P60.8 billion from the exchange offer program.

Under the exchange offer program for that RTB issue, bondholders were given the option to switch their retail bonds issued in 2017 for new debt papers.

The BTr has set a P205-billion borrowing program for July and will offer P145 billion in Treasury bills via weekly auctions and P60 billion in T-bonds to be auctioned off every other week.

The government borrows from domestic and foreign lenders to plug its budget deficit, which is seen to hit 8.4% this year. — B.M. Laforga