BTR partially awards bids for T-bonds
THE Bureau of the Treasury partially awarded P25.1 billion in reissued 10-year Treasury bonds (T-bonds) on Wednesday despite high bid rates as investors continue to hedge against a potential surge in inflation.
With 4 years and 11 months to maturity, the T-bonds were capped at an average rate of 5.772 percent. This was up by 18.8 basis points than the secondary market benchmark rate for the 5-year tenor at 5.584 percent but down by 6.8 basis points than the secondary market benchmark rate for the security at 5.84 percent.
Had the Treasury decided to fully accept the bids, rates would have shot up to 5.832 percent, exceeding both comparable secondary market rates for the security and the tenor.
National Treasurer Rosalia V. De Leon told reporters they “saw rates climb higher with analysts expectation of surging inflation and breaching inflation target band.”
According to De Leon, the rates also tracked the upward movement of US Treasuries stimulated by the hawkish stance maintained by the US Federal Reserve.
Expectations of a surge in inflation are anchored on the 4.9 percent print in April, which was the highest since December 2018 when the rate was pegged at 5.2 percent. April ’s rate was an uptick from the 4.1 percent recorded in March and the 4 percent in February.
Nonetheless, the tenor attracted P55.3 billion in total bids, making the auction oversubscribed.
For this month, the Treasury is targeting to raise P200 billion from the domestic debt market. Since the start of May, however, the Treasury was only able to sell P77.7 billion in government securities.
Last month, the government earned P164.4 billion from auction of securities out of a P200-billion programmed offering.
The government aims to borrow this year a total of P2.2 trillion, around 75 percent of which is expected to come from the domestic debt market.
As of end-march, the national government’s outstanding debt has hit a new record-high of P12.68 trillion, which the incoming administration inherits along with a yawning deficit and scars that anti-covid measures left on the economy.