Government partially awards P12-billion T-bonds amid high market rates

The Bureau of the Treasury (BTr) on Tuesday partially awarded P12 billion in its latest Treasury bonds (T-bonds) auction, on the back of high rates set by the market.

The BTr auction committee received bids as high as P25.884 billion for its five-year T-bonds with an initial offer of P20 billion, but the committee decided to partially award only P12 billion due to the high rates set for the security.

National Treasurer Rosalia V. de Leon told financial reporters that the auction committee decided for a coupon rate of 5.5 percent for the security in line with the Treasury’s market expectations, which was higher by 87.5 basis points than the previous auction’s coupon rate of 4.625 percent.

“Otherwise, if we made a full award it will be a really steep climb. But with [a] 5.5 percent [coupon rate], I think that’s within our own market expectations and that’s also pricing in the market’s own expectations of the highly probable Fed [Federal Reserve system] rate hike this March,” de Leon said.


The T-bond tenders reached P25.8 billion, but the committee awarded only a total of P12 billion, at an average annual rate of 5.452 percent, higher than the 4.530 percent in the
previous auction.

She added that high bid rates offered to government securities may be expected in the coming auctions since the market is taking into account the possible rate hikes expected
for this year.

“Well, the upward trend will really continue, given the expectations that there will be three to four rate hikes, but, hopefully, in terms of the way the increase will be tempering, the spikes will not be really abrupt. And, hopefully, that would come out after the outcome of the policy meetings of both the Fed and the Monetary Board,” she added.

The previous auction for five-year government security happened last year under the country’s 20th offering of retail Treasury bonds (RTBs), with the BTr awarding P130 billion in its rate-setting auction from the P30 billion on offer. The RTB was set with a coupon rate of 4.625 percent and tenders amounting to P191 billion.


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