10-year bonds fetch lower rates

The Bureau of the Treasury (BTr) yesterday successfully raised P30 billion from the issuance of new 10-year debt papers, which were priced at a lower coupon rate amid strong demand from investors.

During yesterday’s auction, freshly issued 10-year bonds fetched a coupon rate of 2.875 percent, 400 basis points down from the 6.875 percent coupon recorded for the last 10-year bond series issued in January 2019.

This is, however, slightly higher than the secondary market rate for 10-year securities, which settled at 2.788 percent in the previous day.

The P30 billion offering was almost twice oversubscribed as total tenders amounted to P59.71 billion.

In a text message to reporters, National Treasurer Rosalia de Leon said the bond auction was met with strong demand from investors amid low inflation and ample liquidity in the financial system.

“Inflation remains benign at 2.5 percent. Market still awash with liquidity,” she said.

Earlier, the treasurer said P38.35 billion in matured debt papers have recently been brought back to the financial system.

The Philippine Statistics Authority (PSA) also reported that inflation picked up to 2.5 percent in June after four months of deceleration.

This brought the average inflation to 2.5 percent in the first six months of the year, which is within the government’s target of two to four percent.

Meanwhile, De Leon said the BTr is moving the auction date for the planned retail Treasury bond (RTB) sale from July 15 to July 16.

Earlier, she said funds raised from the RTB issuance would be used for budgetary support amid a widening fiscal deficit due to the pandemic.

Full details for the fund raising activity will be released within the week.