Government raises P110 billion from sale of T-bonds

MANILA, Philippines — The government raised P110.2 billion in long-term securities this month, slightly short of target, as rates picked up in anticipation of delayed easing by the central bank.

The Bureau of the Treasury yesterday fully awarded P30 billion for the reissued 20-year T-bonds with a remaining life of 19 years and 11 months. This is the last T-bonds auction for June.

This brought total T-bonds raised for the month at P110.23 billion or 92 percent of the entire P120 billion target to be borrowed from the local debt market.

Rates for the four auctions this month were consistently on an uptrend.

This was due to the continued weakening of the peso for weeks now, which will likely prompt the Bangko Sentral ng Pilipinas to stand pat on key policy rates.

The BSP will hold its policy meeting today  and is widely expected to keep policy rates unchanged at a 17-year high of 6.5 percent.

Further, T-bond rates were also on the rise due to more expensive global crude oil prices as well as the more conservative stance of the US Federal Reserve as its own inflation remains elevated as well.

During yesterday’s auction, the 20-year T-bonds fetched an average rate of 6.86 percent, up by 2.9 basis points from the 6.831 percent BVAL Reference Rate, which is the standard for securities.

Rates went from a low of just 6.8 percent and a high of 6.9 percent. However, it was below the original coupon rate of 6.875 percent.

Yesterday’s average rate was also higher than the 6.797 percent during the last 20-year T-bond auction on May 21.

At the time, the government only awarded P22.717 billion out of the P30 billion on offer.

Demand for yesterday’s securities attracted P51.097 billion bids, oversubscribing the auction by 1.7 times.

Bids jumped by 35 percent from the last 20-year auction where offers only reached P37.919 billion.

The latest offering has a maturity date of May 23, 2044.