BTr sells P9B worth of 2022 T-bonds

MANILA, Philippines - The government yesterday successfully sold P9-billion worth of 2022 Treasury bonds at a coupon rate of 4.750 percent as cash-rich investors gobbled up the debt paper.

The Bureau of the Treasury (BTr) received P44.155 billion worth of bids, more than four times the planned debt sale.

The coupon rate of the 10-year bonds auctioned yesterday fell below the 4.875 percent rate of a comparable paper floated in July.

Deputy Treasurer Eduardo Mendiola attributed the positive investor response to the country’s strong economic fundamentals and to the high level of liquidity in the domestic market.

“There’s so much liquidity out there as the tenders would indicate. This is an indication that there’s really so much money out there. This is also the proof that investors have enough confidence in government securities,” Mendiola said.

He said investors feel comfortable in parking their funds in government debt papers because of the strong economic fundamentals.

Members of the economic team led by Finance Secretary Cesar Purisima and National Treasurer Roberto Tan are currently in Australia for a non-deal road show that aims to showcase the government’s recent gains such as the strong economic growth in the first half of the year and better-than-expected budget deficit numbers as of end-July.

In July, the government posted a budget gap of P39.249 billion, wider than the P26.482 billion posted in the same month last year.

The July figures brought the January to July budget deficit to P73.731 billion, still way below the programmed ceiling for the year of P279 billion or 2.6 percent of gross domestic product (GDP).

The economy, meanwhile, grew by 6.1 percent in the first half of the year after expanding by 5.9 percent in the second quarter and 6.4 percent in the first three months of 2012.

The government hopes to raise P108 billion from the sale of T-bills and T-bonds in the third quarter of the year or slightly higher than the programmed domestic borrowing of P106.5 billion in the second quarter.

The government relies on local and foreign borrowing to fund its budget deficit, which is expected to hit roughly P279 billion this year. Last year, the budget gap hit P197.8 billion, lower than the original program of P300 billion set for 2011.

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