Reissued T-bonds fetch higher rate

The Bureau of the Treasury (BTr) yesterday made a full award of the P10 billion in reissued three-year Treasury bonds (T-bonds) amid strong demand from investors.

As a result, the securities with a remaining life span of two years and eight months fetched an average interest rate of 4.703 percent, 7.1 basis points higher than the 4.632 percent recorded in the previous auction.

It was also higher than the secondary market rate for the same securities,

which settled at 4.5837 percent the afternoon before the auction closed.

The auction was almost twice oversubscribed, with total tenders amounting to P19.42 billion.

National Deputy Treasurer Erwin Sta. Ana said the auction committee decided to go for a full award as the average rate of the bids fell within the expectations of the Treasury.

“(It’s up) 7.1 basis points from the previous, but that’s relatively flat, not much of a difference,” Sta. Ana said.

Sta. Ana said the turnout of the auction was strong, which received almost twice bid-to-cover ratio.

He said the healthy demand may be due to the rising interest rate environment, which the market finds attractive, as well as investors’ continued preference for the shorter end of the curve.

“Usually, the three and five years get the most demand from our investors and that’s basically considering market factors, because all eyes are on the policy meeting on Thursday. Our inflation environment is also being considered,” Sta. Ana said.