Treasury raises P20B from bond tap facility

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THE GOVERNMENT raised an additional P20 billion via the facility. — KARL ANGELO N. VIDAL

THE GOVERNMENT raised another P20 billion through the 10-year bonds on Tuesday after it opened its tap facility to accommodate strong demand from investors.

The Bureau of the Treasury (BTr) made a full award of the Treasury bonds (T-bond) it offered through a tap facility, which was opened from 2 to 4 p.m. on Tuesday for its market makers.

The 10-year instruments, which fetched a coupon of 6.875%, carry a 6.829% average based on the yield fetched during the bond auction. The average rate is 14.6 basis points lower than the 6.975% rate fetched when the 10-year bonds were last offered last month.

The Treasury has already raised a total of P75.91 billion from the tap facility after opening it for six straight auctions.

Last Monday, the Treasury also offered one-year Treasury bills through tap facility, accepting all bids amounting to P300 million.

The 10 market makers allowed to participate in the tap facility are Bank of the Philippine Islands, BDO Unibank, Inc., China Banking Corp., Citibank Philippines, Development Bank of the Philippines, Land Bank of the Philippines, Metropolitan Bank & Trust Co., First Metro Investment Corp., Rizal Commercial Banking Corp. and Security Bank Corp.

These financial institutions are given privileges such as the facility in exchange for obligations like submitting rate bids within a prescribed range.

Following Tuesday’s auction proper, National Treasurer Rosalia V. De Leon said market participants are now looking to park their funds in longer-dated bonds as inflation is expected to decelerate and amid ample liquidity onshore.

Following its policy meeting last December, the central bank said it expects inflation to return below four percent by the end of the first quarter, well within the 2-4% target band of the government.

Sought for comments, a bond trader said Tuesday’s tap facility offer was a successful one on the back of strong demand from market players.

“It was a success given the strong demand for the 10-year bonds, since it fetched tenders reaching P50 billion during the T-bond auction,” the trader said in a phone interview.

The government plans to raise P360 billion this quarter through domestic means. Some P240 billion will be borrowed through 12 weekly T-bill auctions during the three-month period, while P120-billion worth of T-bonds will also be issued through six fortnightly auctions.

The state wants to borrow P1.189 trillion in 2019 to fund its spending plans. Of the amount, 75% will be sourced domestically while the remainder will be from foreign creditors.

However, the 2019 national budget has yet to be passed by Congress and signed into law, leaving the fiscal program hanging so far. — Karl Angelo N. Vidal