Investors waiting to exhale as BTr auction fetches P4.1 billion

The Bureau of the Treasury (BTr) partially awarded P4.120 billion in its latest Treasury bond (T-bonds) auction on Tuesday from the offer of P10 billion, with rates still leaning toward the higher end of the curve.

Deputy Treasurer Erwin D. Sta. Ana told financial reporters that, despite the partial award for the T-bonds, the auction committee still witnessed a good auction turnout for the government security, given that there is a demand for the longer end of the curve.

“We looked again at the quality of the bids; we compared it with the pre-auction surveys we do with the dealers, so we try to look where the sweet spot is, what we can say as optimal market level. That’s the driving force behind the partial award. Obviously, because of the rising interest-rate environment, there is really more of a cautious stance taken by some market participants. Then again, that’s tempered by the demand in the long end,” Sta. Ana said.

Bids for the reissued 20-year T-bonds reached a high of P14.200 billion, with the auction committee partially awarding P4.120 billion in the end, the average annual rate for the IOU settled at 6.979 percent. This saw an increase of 12.9 basis points compared to the previous auction rate of 6.850 percent.

If the auction committee decided to fully award the P10 billion on offer, the rate would have shot up by 26 basis points to settle at 7.110 percent.

“We saw demand at the long end considering that we had a decent noncompetitive bid . . . so it’s a good turnout actually,” he added.

He further explained that market investors may still be taking a cautious stance in terms of bidding at the auction for government securities at the moment, which may disappear once a more concrete policy agenda is implemented by the Bangko Sentral ng Pilipinas (BSP).

“It’s really the Monetary Board [meeting]…We were discussing with BSP colleagues, and the consensus of the analysts is to hold. . .maybe, [when the] market gets more clarity on the policy agenda of the BSP, we could probably see some improvements in terms of auction participation,” he said.

The Monetary Board will have its fourth meeting on June 20, a day ahead of the original date set for the meeting, according to the BSP.

At the previous monetary policy meeting in May, the Monetary Board increased the interest rate on the BSP overnight reverse repurchase facility by 25 basis points to 3.25 percent.


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Turning Points 2018