T-bond rates up as investors take cover from fresh US tariffs
The Marcos administration faced higher borrowing costs during Tuesday’s sale of Treasury bonds (T-bonds) amid unease in financial markets as new US tariffs took effect yesterday.
The Bureau of the Treasury (BTr) raised P30 billion, as planned, via reissued T-bonds, which have a remaining life of five years and four months.
Auction results showed the T-bonds attracted P56.8 billion in total tenders, exceeding the original size of the offering by two times.
But despite such a demand, the debt paper still fetched an average rate of 6.019 percent, more expensive than the 5.968 percent seen in the previous auction of the same tenor last Feb. 4.
The average rate sought by local creditors was also higher than the 5.935 percent quoted for the comparable tenor in the secondary market.
Increased demand
“The higher awarded rate in today’s T-bond auction reflected increased demand for fixed-income securities by investors amid geopolitical uncertainties in the financial market,” a trader said. It was reported that new US levies on Canada, Mexico and China went into force on Tuesday,
“For next week, T-bond auction yields might be influenced with this week’s economic releases, specifically in Philippine inflation and US labor market, which are seen to highly influence the policy decisions of the Bangko Sentral ng Pilipinas and the US Federal Reserve,” he added.
For this year, the Marcos administration is targeting to borrow P2.55 trillion from creditors at home and abroad to plug a projected budget hole amounting to P1.54 trillion, or equivalent to 5.3 percent of the country’s gross domestic product.
By sources of financing, the government will borrow P507.41 billion from foreign investors in 2025. The remaining P2.04 trillion is targeted to be raised domestically, of which P60 billion will be via short-dated Treasury bills and P1.98 trillion via T-bonds.
