T-bond yields rise; P20B raised
The Marcos administration met its target in a Treasury bond (T-bond) sale on Tuesday but agreed to pay higher yields demanded by local creditors, as uncertainty over the war in the Middle East continued to deter investors from taking longer-term positions.
The Bureau of the Treasury borrowed P20 billion via re-issued T-bonds, which have a remaining life of seven years and three months.
While the auction was oversubscribed—drawing P26.5 billion in bids—the appetite for the debt was tepid, exceeding the offered amount by a modest 1.3 times.
Investors demanded an average yield of 6.643 percent, up from the 6.535 percent seen in the secondary market for similar maturities.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said demand for longer-dated bonds remain muted amid lingering uncertainties over the Middle East conflict.
Ricafort cited “some market hesitancy on longer-end tenors to lock in with some market risk to manage, compared to shorter-dated tenors.”
The auction also came ahead of the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on April 23. Ten of 16 economists polled by the Inquirer expect the Monetary Board to raise the benchmark rate by 25 basis points to 4.5 percent, while the rest expect no change.
If delivered, the increase would mark the first tightening move since October 2023, when the BSP raised rates in an off-cycle decision after inflation surged above 6 percent.
This year, the government plans to borrow P2.68 trillion from lenders to plug a projected budget deficit of P1.6 trillion, equivalent to 5.3 percent of gross domestic product.
