THE GOVERNMENT fully awarded the reissued five-year Treasury bonds (T-bonds) it auctioned off on Tuesday despite a climb in yields amid strong demand.

The Bureau of the Treasury (BTr) borrowed P30 billion in reissued five-year T-bonds as programmed out of total bids worth P80.581 billion, which was more than two times bigger than the initial offer.

The average rate for the five-year notes increased by 50.6 basis points to 3.182% on Tuesday from the 2.676% seen in the May 27 auction. The yield was still lower than the 2.969% rate for the five-year papers at the secondary market.

National Treasurer Rosalia V. de Leon said demand for the papers remained strong as the rate stayed within the level quoted at the secondary market.

“(The BTr made a full award as it) received strong offer at rates hovering around secondary level,” Ms. De Leon told reporters via Viber, adding they did not open the tap facility.

A bond trader said the average rate fell within market expectations, noting the slight increase was an indication that participants are already searching for higher yields.

“The range was quite expected given the action in the past few days. Market is pricing in a possible jumbo bond issuance. This auction showed market demand for yield pickup,” the trader said via Viber on Tuesday.

Earlier this month, Ms. De Leon said they will continue to monitor market conditions for a possible jumbo bond issue.

The last time the BTr offered retail Treasury bonds was in February when it raised a record P310.8 billion in three-year papers.

The Treasury raised a total of P223.71 billion this month via the sale of government securities; P151.3 billion in Treasury bills via weekly auctions and P75 billion in T-bonds that were offered fortnightly.

The total exceeded the P170-billion program set for this month but was slightly lower than the P246.3 billion raised in May, which was also against a P170-billion plan.

The Treasury is expected to release its July borrowing program this week.

The government borrows from local and foreign sources to fund its budget deficit which is now seen to hit 8.4% of gross domestic product. — Beatrice M. Laforga