T-bond rates ease after dovish BSP, Fed signals
The government raised a total of at least P60 billion from long-term debt during Tuesday’s sale of Treasury bonds (T-bonds) as investors rallied to the debt paper amid dovish signals from the US Federal Reserve and local monetary authorities.
Auction results on Tuesday showed the Bureau of the Treasury (BTr) borrowed the full issuance of P30 billion via re-issued 10-year T-bonds as total bids reached P95.61 billion, or 3.2 times larger than the original issuance last Jan. 25.
The BTr also offered an additional P30 billion through a tap facility—an electronic system that improves the issuance of government debt instruments—higher compared to the P20 billion it initially announced.
“The strong demand from our Government Securities Eligible Dealers allows us to raise additional funds through tap,” National Treasurer Sharon Almanza said in a message. With a remaining life of nine years and five months, the bonds fetched an average rate of 6.212 percent.
This was 5.6 basis points lower than the 6.268 percent quoted for the comparable 10-year corporate debt note in the secondary market, based on Peso Bloomberg Valuation Service reference rates.
This was also 0.8 bps lower than the 6.22 percent prevailing for the comparable government security.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. said the bid was higher as local and foreign investors hoped to lock in while yields remained high before American and local policy rate cuts that markets expect to happen later this year.
