Reissued T-bonds fetch lower rates

Reissued five-year Treasury-bonds fetched lower rates yesterday amid strong demand and ample liquidity in the domestic market, according to the Bureau of the Treasury (BTr).

During yesterday’s auction, the Treasury awarded in full the P15 billion in reissued T-bonds with remaining life span of four years and three months.

The securities fetched an average rate of 3.979 percent, 24.7 basis points lower than the previous auction’s 4.226 percent.

The figure was also broadly in line with the secondary market rate of the same securities, which settled at 3.95 percent before the auction closed.

The auction was almost twice oversubscribed, with total tenders amounting to P29.95 billion.

National Treasurer Rosalia de Leon said the lower rates and strong turn-out reflects the ample liquidity in the market.

“We saw good demand because the volume for the 28-day TDF was reduced to P100 billion from P110 billion. So I guess everybody’s flocking the GS (government securities) market and the offering today is something that caters to their appetite given that it’s in the (shorter) belly of the curve,” De Leon said.

De Leon said market participants are also striving to improve their performances in preparation for the Enhanced Government Securities Eligible Dealers (GSEDs) program of the BTr.

“We’re happy with the participation of the GSEDs. I suppose that’s because they want to improve their respective performances. Sometime, before the end of the year we’ll be selecting our market makers, so everybody’s showing a good performance,” she said.

Under the enhanced GSED program, traders who have shown capacity and commitment to support the development of the GS market will be evaluated by the Treasury and selected as market makers. They will be given benefits and obligations by the BTr.

The enhanced GSED program is part of the government’s initiatives to develop a better local debt market. Aside from this, the BTr is also gearing up for the launch of its repurchase facility.