Investors swarm T-bond auction

MANILA, Philippines — Demand for long-term government securities spiked yesterday with the government able to raise P35 billion from the sale of Treasury bonds (T-bonds) at lower rates than secondary markets.

The Bureau of the Treasury fully awarded P35 billion worth of reissued 10-year T-bonds on offer. The T-bonds fetched an average yield of 6.865 percent from a low of 6.8 percent and a high of 6.89 percent.

The rate was 5.1 basis points lower than the BVAL Reference Rate, which is the standard for securities, of 6.916 percent for the 10-year bond.

Demand for the securities attracted P123.318 billion, oversubscribing the auction by 3.52 times. Maturity date of the offer is set on June 23, 2032.

National Treasurer Rosalia de Leon said strong demand is an understatement in yesterday’s auction. “Appetite for long end coming from good yield pick up, especially for retirement funds to lock in high rates,” de Leon said.

Asked whether the Treasury would prefer longer tenors in its borrowing program moving forward, de Leon said the government is “inclined to always stretch maturity subject to a reasonable rate.”

The comparable 10-year BVAL yield, now at 6.92 percent, has been easing for the third straight week.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said this is largely a reflection of the recent easing of the comparable US Treasury yields.

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