The Bureau of the Treasury (BTr) on Tuesday decided to fully award the P15-billion offering for its reissued 10-year Treasury bonds (T-bonds), as investors took advantage of lower rates.
National Treasurer Rosalia V. de Leon told reporters on Tuesday that the auction committee decided to fully award the reissued 10-year T-bond as tenders were oversubscribed four times, indicating investors’ appetite for longer-dated securities.
“Again, we continue to see the appetite of investors on the long end [of the curve] at the same time they are locking in on the rates already based on expectations that rates will further [be] trending downward given lower inflation expectations already for November,” de Leon said.
Bids for the IOU reached P49.389 billion. The committee awarded the P15 billion on offer by the BTr at an average annual rate of 6.975 percent, lower by 106 basis points than the previous rate of 8.035 percent.
The reissued 10-year T-bonds has a remaining life of nine years and three months.
Seeing the strong demand for the security, the BTr decided to open anew its tap facility for its market makers. This is the third time this year that the tap facility was opened.
“We will just open [the tap facility], the same rules apply but we don’t have a cap anymore. Before it was only up to P15 billion, now we can upsize to more than P15 billion. So it depends on the discretion of the treasury how much we will accept,” de Leon said.
But this time, de Leon said the BTr has the discretion to cap the awarded amount at a level the bureau deems fit. Previously, the awarded amount under the tap facility was only based on the same amount awarded during the auction for the security before opening the tap facility on the same day.
The Treasury’s 10 market makers are the only ones that can access the tap facility, which is opened from 2 to 4 p.m. on Tuesday. The tap facility allows Government Securities Eligible Dealers to access bonds after the initial primary auction.
The 10 market makers are BDO Unibank Inc., Bank of the Philippine Islands, China Banking Corp., Citibank Philippines, Development Bank of the Philippines, First Metro Investment Corp., Land Bank of the Philippines, Metropolitan Bank and Trust Co., Rizal Commercial Banking Corp. and Security Bank Corp.
On November 28, the BTr was able to award another P15 billion for the re-issued 7-year T-bonds at an average annual rate of 6.974 percent. Bids reached P53.90 billion through its tap facility.
During the week before that, the BTr also opened its tap facility after its 5-year reissued T-bonds was three times oversubscribed as bids reached P50.976 billion. The rate for the security settled at a reasonable 7.003-percent.
According to the BTr web site, the auction for the 10-year T-bonds is the last for the year, while the government may hold two more auctions for T-bills this month.