Govt raises ₧35B from selling IOUS with lower coupon rate

THE Bureau of the Treasury borrowed P35 billion from the local debt market as it fully awarded reissued 10-year Treasury Bonds (T-bonds) on Tuesday.

With 9 years and 11 months to maturity, the debt paper fetched an average rate of 3.914 percent, lower than the 4 percent coupon rate set last July.

The tenor attracted total submitted bids of P70.7 billion, making the auction twice oversubscribed.

The security is set to mature on July 22, 2031.

Following the auction, National Treasurer rosalia V. De Leon said they have observed investors’ continued preference for long tenors amid expectations that July inflation will settle within the monetary authorities’ target range.

“[We] continue to see bias in long tenor with steady inflation outlook,” De Leon told reporters.

She added they also opened the tap facility window to auction off an additional P7-billion offering for the same tenor.

The Philippine Statistics Authority is set to report the July inflation data on Thursday, August 5.

Days ahead of the release of the official inflation data, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno told reporters last Friday that inflation likely hit 4.3 percent in July, but is expected to fall within the range of 3.9 percent to 4.7 percent during the month.

Inflation has been steady at 4.5 percent since March to May before falling to 4.1 percent in June. Inflation has not tamed down to a rate within the government’s target of 2 to 4 percent for the year.

For August, the Treasury has set to borrow P200 billion from the local debt market, slightly lower than the P235 billion it programmed in July.

This year, the national government programmed to borrow a total of P3.1trillion, of which around 75 percent is expected to be raised through domestic sources.

The outstanding debt of the national government has already piled up to P11.166 trillion as of end-june this year, swelling by 23.3 percent from P9.054 trillion a year ago.

Finance officials last week said the debt-to-gdp (gross domestic product) ratio this year is projected to rise to 59.1 percent from 54.6 percent in 2020. It is also expected to peak next year at 60.8 percent—slightly above the internationally accepted threshold—before gradually tapering off to 60.7 percent and 59.7 percent in 2023 and 2024.