Bond buyers boost bids after hefty gov’t payouts
The Marcos administration tapped local creditors at lower rates in Tuesday’s Treasury bond (T-bond) auction. The government took advantage of a cash-rich market after settling hefty debt maturities.
The Bureau of the Treasury was able to raise the planned amount of P30 billion via re-issued T-bonds. These have a remaining life of four years and 10 months.
The offering attracted P79.7 billion in total demand, exceeding the original size of the issuance by 2.7 times.
Last week, lenders tendered a total of P66.7 billion only for seven-year bonds.
The latest auction results showed the five-year debt paper fetched an average rate of 5.772 percent. This was lower than the 5.896 percent seen during the previous offering of the comparable tenor last July 1.
It was also cheaper than the benchmark yield of 5.814 percent quoted in the secondary market.
“The five-year T-bond average auction yields eased after the large bond maturity today, Sept. 9, at P288.659 billion that could have increased the demand for government securities and reinvest at still much higher yields,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp..
This year, the government plans to borrow P2.6 trillion from lenders to plug a projected budget deficit of P1.6 trillion. This is equivalent to 5.5 percent of gross domestic product. The drive is expected to push the debt stock to P17.36 trillion by year’s end.
Fiscal planners say they will continue to favor onshore borrowing to limit exposure to foreign exchange risks.
