Gov’t holds back on T-bond issuance to curb rate
The government was able to raise P19.8 billion from the partial awarding of reissued 20-year bonds auctioned on Tuesday.
The Bureau of the Treasury (BTr) said that the reissued 20-year bonds—first launched in 2020—fetched an average interest rate of 6.473 percent.
The reissued bonds now have 13 years and 8 months remaining before maturity.
Investor demand slightly exceeded the offer, with total bids reaching P34.5 billion, making the auction 1.1 times oversubscribed.
Despite the interest, the BTR decided to cap the awarded amount, citing yield considerations.
This latest sale brings the total outstanding volume of this bond series to P184.1 billion.
Sought for comment, RCBC chief economist Michael Ricafort told the Inquirer that the government bond yield, or the interest it pays to borrowers, was a bit higher this time compared with recent benchmarks.
He said this was partly because US Treasury bond yields have gone up lately.
This happened after Moody’s had lowered the US credit rating and likewise because of plans for new tax cuts and economic stimulus in the US.
When US bond yields rise, it usually means borrowing costs get higher for many countries, including the Philippines.
Ricafort also noted that fewer investors had bid on the government bonds this time compared with previous auctions, which contributed to the slightly higher interest rate. Some bids asking for higher yields were rejected to keep costs down.
On the bright side, he cited positive signs for the local economy, particularly hints of further monetary easing.
