THE national government raised P100 billion from the sale of Treasury bonds (T-bonds) this month with the Bureau of Treasury (BTr) capping the last tender with a full award on the back of easing yields.
Despite raising the said amount, the Treasury was failed to reach its target borrowing of P130 billion from the tender of T-bonds.
Out of its five T-bonds auctions, the Treasury made a full rejection once of P30 billion worth of government securities while making a full award in the remaining four other tenders including Wednesday’s auction.
In the lone T-bonds auction wherein it did not make a single award, the Treasury faced beyond benchmark asking rates from investors worsened by anemic demand that did not meet the full program amount.
In the four succeeding T-bonds auctions, the Treasury was able to make full awards as yields sought by investors continuously eased on the back of favorable domestic and global market conditions.
On Wednesday alone, the Treasury raised P20 billion from the auction of a six-year T-bonds. The tender was oversubscribed with total bids reaching P60.266 billion, three times more than the programmed amount. The T-bonds had a remaining term of five years and 10 months. Likewise, the trend of easing yields continued as the average rate for the government securities settled at 6.099 percent, with a range of 6.045 percent to 6.12 percent.
The average yield for the six-year T-bonds was lower than the secondary market benchmark level of 6.219 percent.
Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort explained that lower US Treasury yields and stronger peso exchange rate are providing support for the decline in investors’ asking yields for the local T-bonds.
“Lower auction yields recently due to stronger peso exchange rate among the strongest in nearly three months vs. the US dollar, global crude oil prices still lingering among 4-month lows, both of which would help further ease inflationary pressures and support pause in local policy rates,” Ricafort said.
“Another positive factor: The markets priced in Fed rate cuts nine; about 100 basis points in 2024 that could be matched locally,” the RCBC executive added.