Govt raises P35B from T-bonds as market liquidity still strong

THE Bureau of the Treasury sold P35 billion in new 7-year Treasury Bonds (T-bonds) as it continues to take advantage of strong liquidity in the market.

The tenor attracted total tenders of P90.4 billion, almost three times oversubscribed compared to the P35 billion offering.

The 7-year T-bonds also fetched a coupon rate of 3.625 percent, lower than prevailing secondary-market rates.

Following the auction, National Treasurer Rosalia V. De Leon expressed satisfaction over the auction results.

“Healthy auction with strong demand for 7 year [securities] at rates marginally lower than secondary levels,” De Leon told reporters in a message.

She added they also opened the tap facility for an additional P25-billion offering. This offering is significantly bigger than what was offered in the previous tap facility auctions.

The tap facility auction opened to 11 government securities eligible dealers-market makers fetched P25 billion.

The bigger tap facility offering also comes a day after the government announced on Monday it plans to offer euro-denominated bonds. The government said they may offer 4-year and/or 12-year and/or 20-year euro-denominated bond offering; the offering, however, is subject to market conditions. Government expects the bonds to get a “Baa2” rating from Moody’s, a “BBB+” from S&P and a “BBB” from Fitch.

Proceeds from this possible euro bond offering will be used for budgetary support.

This would be the country’s second offshore bond sale this year after it sold last month about 55 billion yen ($500 million or about P24.2 billion) in 3-year zero-coupon Samurai bonds.

The last time that the government tapped the euro bond market was in February last year wherein the government was able to raise €1.2 billion.

The country aims to borrow a total of P3.03 trillion this year, roughly the same amount it borrowed in 2020.

The bulk of the gross borrowings this year will be sourced locally at P2.58 trillion while P442.36 billion will be raised from foreign sources.