Govt borrows ₧20B via sale of reissued T-bonds

THE Bureau of the Treasury borrowed another P20 billion by selling reissued 10-year debt papers after opening the tap facility to accommodate overwhelming demand.

The reissued 10-year Treasury Bonds (T-bonds), which had a coupon rate of 7.25 percent, attracted total bids of P99.2 billion, making the auction more than four times oversubscribed.

This was the second time that the Treasury opened the tap facility window for this month. Last week, the Treasury also raised an additional P5 billion from its sale of reissued 7-year T-bonds via the tap facility auction.

At the auction proper last Tuesday, the security—with a remaining term of nine years and 11 months to maturity—fetched an annual average rate of 6.865 percent, lower than the original coupon rate set on its first issue last month as well as the secondary market benchmark rates.

Overwhelming demand was seen during the auction proper, prompting the Treasury to open the tap facility window to all eleven government securities dealers-market makers.

National Treasurer Rosalia V. De Leon earlier said the strong appetite for the longer tenor was due to investors’ predilection for high rates. The sentiment was fueled after the Bangko Sentral ng Pilipinas (BSP) surprised markets with an aggressive rate hike of 75 basis points on July 14 and after Governor Felipe M. Medalla said there is still room for monetary authorities to raise interest rates again. That would impact bond prices.

The government is set to borrow P200 billion from the local debt market.

As of end-may, the national government’s outstanding debt dipped to P12.5 trillion from a record-high of P12.76 trillion as of end-april due to its repayment of a P300 billion short-term, zero-interest loan from BSP.