THE GOVERNMENT fully awarded the Treasury bonds (T-bonds) it offered on Tuesday as rates dropped amid strong investor demand.

The Bureau of the Treasury (BTr) borrowed P30 billion as planned via the reissued 10-year T-bonds it auctioned off on Tuesday as the offer was nearly three times oversubscribed, with total tenders reaching P82.587 billion.

The bonds have a remaining life of six years and three months and carry a coupon rate of 4.75%. 

The reissued 10-year securities fetched an average rate of 2.719%, down 7.2 basis points (bps) from the 2.791% quoted at last month’s auction of the same bond series.

The Treasury also opened its tap facility to raise another P10 billion via the tenor to take advantage of the low average yield seen yesterday.

National Treasurer Rosalia V. de Leon said investor demand was strong as the market continues to hunt for higher returns.

“The auction saw interest on the intermediate part of the curve driven by search for yields,” Ms. De Leon told reporters via Viber after the auction on Tuesday.

Meanwhile, a bond trader said the 10-year tenor’s average rate fell at the lower end of the projected range as investors continued to prefer to put their excess cash on bonds with shorter tenors.

“For the bond auction, the rates were lower than market expectations. The bids were nearly three times oversubscribed, slightly lower because the market still prefers shorter tenors over long-dated ones. The preference was likely due to the clients’ demand,” the trader said by phone after the auction.

The Treasury plans to borrow P140 billion from the local debt market this month: P80 billion via weekly auctions of Treasury bills and P60 billion from fortnightly offerings of T-bonds.

It has been making full awards and even opening its tap facility during its previous auctions as demand continued to soar amid strong liquidity in the financial system.

The government is looking to raise P3 trillion this year from domestic and external lenders to help fund its budget deficit seen to hit 8.9% of gross domestic product. — B.M. Laforga