The Bureau of the Treasury decided on Tuesday to fully award five-year Treasury bonds with remaining life of four years and 10 months on the back of strong demand for the security, with total tenders amounting to P26.6 billion, or almost twice the P15 billion on offer.
The auction fetched an average rate of 4.132 percent, which was within internal estimates, and indicates a minimal increment from the 4.000 percent set on original issuance.
“The auction was quite successful, with close to twice the size on offer. We received a bit of an increment from the last five-year auction last month. So, I think, this increase is really brought about by the general adjustment in the curve,” Deputy Treasurer Erwin D. Sta. Ana told financial reporters.
According to Sta. Ana, the market is anticipating onshore developments, mainly the buildup of inflation and the result of the Monetary Board meeting this week.
“The market is clearly waiting for other signals externally, and developments onshore, like how our inflation will build up in the next couple of weeks, and results of the Monetary Board meeting. So, those are the factors to these results,” he added.
“The Fed [Federal Reserve] indicated a less hawkish view, and there’s also a possibility of two more rate hikes as reported, so, I think, that’s something the market is actually factoring,” he said.
An annual rate of 4 percent was deemed to be too low for the reissued Treasury bonds.