Government borrows P35 billion from local market

MANILA, Philippines — Higher rates from investors did not stop the government from borrowing P35 billion in Treasury bonds (T-bonds) as the debt market prepares for a more hawkish Bangko Sentral ng Pilipinas (BSP).

The Bureau of the Treasury yesterday fully awarded P35 billion worth of reissued seven-year T-bonds on offer.

The T-bonds fetched an average yield of 6.76 percent, from a low of 6.625 percent and a high of 6.8 percent.

The rate was 27.8 basis points higher than the BVAL Reference Rate, which is the standard for securities, of 6.482 percent for the seven-year bond.

Demand for the securities attracted P91.961 billion, oversubscribing the auction by 2.63 times. Maturity date of the offer is set on Jan. 10, 2029.

Last week, the Treasury also raised P35 billion from reissued four-year T-bonds, also at much higher rates.

National Treasurer Rosalia de Leon said the Treasury made a full award even with the higher rates fetched.

“Given the current market environment, we need to provide reasonable returns to investors,” De Leon said.

She earlier maintained that the government is doing a careful balancing act even as it fully awards T-bonds at higher rates.

“We will have to calibrate. For example, if cash remains ample and the rate exceeds the tolerance level, then we will reject,” she said.

Rates have been on the rise as inflation remains elevated and as the BSP is expected to deliver a more aggressive rate hike next month.