THE GOVERNMENT made a full award of the reissued Treasury bonds (T-bonds) it offered on Tuesday as the offer was met with strong demand despite rising inflation.
The Bureau of the Treasury (BTr) raised P35 billion as planned via the reissued seven-year T-bonds, which have a remaining life of six years and 11 months.
The auction attracted P77.091 billion in bids, more than twice as much as the offer volume and higher than the P63.7 billion recorded when the seven-year papers were first auctioned off on Aug. 10.
This prompted the BTr to open the tap facility to raise an additional P5 billion from the debt papers.
The average rate of the reissued seven-year bonds stood at 3.789%. This was slightly higher than the 3.75% coupon fetched for the papers when they were first offered on Aug. 10. The Treasury also raised P35 billion as planned via the fresh seven-year T-bonds at that auction.
This was also 17.8 basis points higher than the 3.611% quoted for the tenor at the secondary market prior to the auction, based on the PHL Bloomberg Valuation Reference Rates.
National Treasurer Rosalia V. de Leon said Tuesday’s T-bond offer saw strong demand from investors, which kept its average rate within secondary market levels even after inflation surged to a 32-month high in August.
The Philippine Statistics Authority on Tuesday reported that headline inflation went up by 4.9% year on year last month, accelerating from the 4% logged in July, as food prices continued to spike.
This was the fastest print in 32 months or since the 5.1% recorded in December 2018. It was also higher than the 4.4% median estimate in a BusinessWorld poll conducted last week and was at the higher end of the 4.1-4.9% estimate of the central bank.
Inflation averaged at 4.4% in the first eight months, breaching the central bank’s 2-4% target and 4.1% forecast for the year.
Ms. De Leon added that the BTr’s borrowing program for the month includes two auctions of seven-year bonds, which would “naturally lead to higher yields.” The Treasury is set to offer seven-year bonds again on Sept. 21.
The Treasury is looking to raise P250 billion from the local market this month: P75 billion via weekly offers of T-bills and P175 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. — BML