T-bond rates down on liquidity boost
The government was able to raise its target amount of long-dated local debts during Tuesday’s sale of Treasury bonds (T-bonds), as the recent settlement of large bond maturities injected more liquidity into the local financial system, increasing demand from investors.
The Bureau of the Treasury was able to borrow P25 billion, as planned, via re-issued T-bonds, which have a remaining term of nine years and seven months.
The offering was 3.1 times oversubscribed after attracting total bids amounting to P77.2 billion.
The 10-year debt paper fetched an average rate of 5.907 percent, lower than the previous auction’s 5.997 percent and the 5.957 percent benchmark yield.
“The 10-year Treasury bond average auction yields eased after the large bond maturity last September 9, 2025 worth P288.659 billion that could have increased the demand for government securities and reinvested at still much higher yields,” Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said.
This year, the government plans to borrow P2.6 trillion from lenders to plug a projected budget deficit of P1.6 trillion, 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. The Marcos administration has also made clear it is seeking an upgrade to an A-level credit rating, a distinction it hopes to achieve by keeping debt metrics in check while sustaining economic growth.
