The Bureau of the Treasury (BTr) has partially awarded the fresh seven-year Treasury bond (T-bonds) up for auction on Wednesday with P7.932 billion from the P10 billion on offer, keeping the coupon rate for the government security at 5.75 percent.
National Treasurer Rosalia V. de Leon told financial reporters the auction committee decided for a partial award of P7.932 billion to keep the coupon rate for the T-bond within internal estimates settling at 5.750 percent. Had the committee awarded the full P10 billion on offer, the coupon rate would have settled at 5.875 percent, or too high for the auction panel.
“[We decided on a] partial award because it’s a new issue. A full award would have a coupon setting of 5.875 [percent]. The partial award tempers the increase in the rates. Otherwise, it would have set a new rate for the seven-year benchmark which would be 5.875 [percent],” de Leon said.
The IOU received bids amounting to P20.668 billion with the auction panel rejecting P12.736 billion, resulting to an annual average rate of 5.712 percent.
The coupon rate of 5.750 percent was higher by 136 basis points from the average annual rate of 4.390 percent set in the previous auction for a seven-year T-bond.
Had the auction committee awarded the full P10 billion would have set the seven-year rate to 5.746 percent. The coupon rate would have been 148.5 basis points higher than the previous auction’s annual average rate.
“[The 5.750 percent coupon rate] it’s within those parameters used by the BTr. And it’s also a healthy auction given the tenders [at P20.668 billion],” she added.
She further said: “The thing is, we have been able to build sufficient liquidity cushions in the Treasury to temper these rate increases being demanded by the banks,” she said.