THE GOVERNMENT fully awarded the reissued Treasury bonds (T-bonds) it offered on Tuesday even as its rate surged on concerns over rising inflation and US Treasury bond yields.

The Bureau of the Treasury (BTr) borrowed P30 billion as programmed from the reissued 10-year T-bonds it auctioned off on Tuesday as total tenders reached P50.248 billion, making the offering 1.67 times oversubscribed.

The notes, which have a remaining life of six years and one month, fetched an average rate of 3.732%, surging by 101.3 basis points (bps) from the 2.719% quoted when the series was last offered on Jan. 19.

National Treasurer Rosalia V. de Leon told reporters after the auction that the increase in the tenor’s rate continued to be driven by lingering concerns over rising prices of goods as well as external factors that affect the local bond market.

“Rates [were] expected as secondary levels climbed in tandem with inflation, higher oil prices and US Treasuries with optimism on the stimulus package,” Ms. De Leon said in a Viber message.

“The market is quite defensive at the moment. With CPI (consumer price index) outlook becoming worrisome and there is no strong appetite for longer tenors,” a bond trader said via Viber.

“While the bids were higher in terms of volume, the yield demanded by bidders were quite high as well,” the trader added.

Consumer prices rose faster for a fifth straight month to a 26-month high in February as food prices continued to surge, the Philippine Statistics Authority (PSA) reported on Friday.

Preliminary data from the PSA showed headline inflation at 4.7% last month, picking up from 4.2% in January 2021 and 2.6% in February 2020. The February inflation result marked the fastest pace since the 5.1% in December 2018.

This brought the two-month average to 4.5%, above the central bank’s 2-4% annual target.

Meanwhile, global oil prices increased on Tuesday, with Brent crude inching up by 0.5% to $68.56 per barrel, Reuters reported. The increase was attributed to growing hopes of faster global economic recovery after the US Senate approved a much-awaited $1.9-trillion stimulus bill.

On the other hand, the yield on the benchmark 10-year US Treasury bond slipped to 1.572% on Tuesday from 1.59% on Monday, but was still up by 15 bps week on week, as investors wary of inflation concerns preferred safe-haven assets.

The BTr wants to raise P160 billion from the local bond market this month, broken down into P100 billion in Treasury bills to be offered weekly and P60 billion via fortnightly auctions of T-bonds.

The government is looking to borrow P3 trillion this year from local and foreign lenders to help fund its budget deficit that is seen to hit 8.9% of gross domestic product. — Beatrice M. Laforga

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