High demand, low rates prompt full T-bond award

MANILA, Philippines — Strong demand for long-term government securities, coupled with lower interest rates, allowed the government to borrow another P35 billion in Treasury bonds (T-bonds).

The Bureau of the Treasury made a full award yesterday of P35 billion worth of originally issued four-year T-bonds on offer.

Coupon rate for the T-bonds stood at 5.25 percent, 23.9 basis points lower than the BVAL Reference Rate, which is the standard for securities, of 5.489 percent for the four-year bond.

The yield is also significantly lower than the 5.908 percent rate fetched during the last four-year T-bond auction in July.

Demand for the securities attracted P106.323 billion, oversubscribing the auction by 3.04 times. Maturity date of the offer is set on Feb. 4, 2026.

“Impressive auction results with strong demand coupled by lower rates versus secondary level of comparator with similar tenor,” National treasurer Rosalia de Leon said, adding, “P37 billion in redemption also found a home in today’s offering.”

The Treasury also opened the tap for P10 billion on strong volume demand and reasonable rates.

Investors have been more into long-term securities, allowing the fully awarded T-bonds in the past few weeks.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said long-term yields continue to ease after reaching pre-pandemic highs amid risks of a US recession that could slow down any future Fed rate hikes.

He said the recovery of the peso also partly supported sentiment on the local government securities market.