P6-B T-bond float may be scrapped

The planned P6-billion, five-year Treasury bond (T-bond) flotation may be scrapped as the market has consistently shown interest in long-term government bonds.

Aside from the bond floatation slated for June and July this year, the weekly volume offering for Treasury bills (T-bills) in the second half of the year may also be affected by the poor market performance.

"We, will release a new borrowing program according to what the market dictates," National Treasurer Sergio G. Edeza said.

Edeza said government was forced to consider the option due to the disappointing outcome of last week’s five-year T-bond auction, which saw banks pushing up rates. This resulted in a dismal tender of a little over P4 billion.

The Bureau of Treasury (BTr) was forced to accept a mere P1 billion out of its scheduled P4-billion volume offering just to avoid paying higher cost.

The BTr is scheduled to issue P6-billion worth of five-year T-bonds, another P4 billion in June, and a P2 billion in July.

This forms part of the government’s P22-billion worth of T-bonds at varying maturities to be offered in the next couple of months.

Edeza said government is looking at the mix or the type of maturity that would replace the five-year T-bonds.

He however added that this would not stop government from bringing down its weekly T-bill by P1 billion, and the T-bond flotation by about P500 million by the third quarter of this year.

Government wants to conclude and consummate its $500-million foreign borrowings to meet its financing requirement for the whole year. Last week, it reportedly inked a $150-million three-year floating rate note with Credit Suisse, the first of the three borrowing deals on the pipeline.

This week, another $100-million package will be signed with JP Morgan-Chase Manhattan while the third transaction worth $250 million is expected to be "done deal" by July. – Ted Torres