HIGHER relative yields hindered the national government from borrowing a whole P30 billion from the domestic market through its tender of Treasury bonds (T-bonds) despite improving market conditions.
The Bureau of Treasury (BTr) only awarded P9.9 billion or about 33 percent of the P30 billion programmed amount for the auction on Tuesday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the average yield for the tender was slightly higher than the previous auction held by the Treasury for the government security with the same tenor. Ricafort said this was most likely the cause behind the partial awarding by the Treasury.
The reissued T-bonds, which had a remaining life of six years and 10 months, fetched an average yield of 6.37 percent versus the 6.328 percent rate recorded in the previous tender of government security with the same maturity last July.
The partial award marks the second consecutive week and the second time this month that the Treasury was unable to raise the full programmed amount from its T-bonds auction.
And it happened despite the average yield of 6.37 percent, was lower than the comparable secondary market benchmark level of 6.42 percent. Investors sought yields from 6.365 percent to 6.373 percent during Tuesday’s tender.
Ricafort said T-bonds’ yields eased as a result of the temporary price ceiling on rice and the proposed reduction on rice import tariffs as part of the government’s efforts in curbing inflationary measures.
“Also amid recent signals that the BSP’s inflation target of 2 percent to 4 percent could still be achieved in the first quarter of 2024 (from as early as November-December 2023) despite higher rice and oil/petroleum prices recently,” he said.
“The 7-year T-bond auction yield was also relatively lower after the peso exchange rate was still relatively stronger recently at 56.70; among the strongest in a week and better versus the P56.99 posted on September 7,” he added.
Nonetheless, Tuesday’s auction was oversubscribed with demand reaching P57.8 billion, nearly two times the programmed amount.
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