By Aaron Michael C. Sy, Reporter
THE GOVERNMENT raised an initial P135 billion from the offering of its recent 10-year fixed-rate Treasury notes it auctioned off on Tuesday under a brand new issuance format targeting institutional investors.
The quantity raised was greater than 4 times the initial P30-billion offering, as tenders reached P197.3 billion, the Bureau of the Treasury (BTr) said in a press release after the auction.
The brand new Treasury bonds (T-bonds) fetched a coupon rate of 6.375%, leading to a mean rate of 6.286%, results of the rate-setting auction posted on the Treasury’s website showed.
Accepted bid yields ranged from 6% to six.4%.
The coupon rate was 10.37 basis points (bps) higher than the 6.2713% seen for the 10-year notes based on PHP Bloomberg Valuation Service Reference Rates data as of April 15 published on the Philippine Dealing System’s website before the auction.
The BTr will proceed to supply the notes to qualified dealers until April 24 at a minimum investment of P10 million and increments of P1 million after.
The problem date for the notes maturing in 2035 is scheduled for April 28.
“The prolonged offer period will allow for a bigger volume than our regular auction. Thus, it’s going to ensure liquidity,” National Treasurer Sharon P. Almanza said in a Viber message.
The Treasury said the prolonged offer period is a primary for a nonretail bond issuance, because it “seeks to determine a brand new avenue for constructing liquid benchmarks.”
“Demand was strong. Investors want to [buy] as inflation is low, which may lead to more rate cuts, so the speed was good to purchase,” a trader said by phone.
The trader added that the coupon rate was inside market expectations because it was at similar levels as secondary market rates.
The Monetary Board resumed its easing cycle last week, lowering the goal reverse repurchase rate by 25 bps to five.5%. Rates on the overnight deposit and lending facilities were also cut to five% and 6%, respectively.
Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr. said expectations of easing inflation support the shift to a more accommodative monetary policy stance, adding that they’re considering further rate cuts this 12 months in “baby steps” of 25 bps at a time.
Rizal Business Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the coupon rate also matched the 10-year US Treasury yield which has been elevated currently as a consequence of the Trump administration’s tariff policies.
“I believe the amount is sweet for BTr because it provides them cushion. We predict that is near their goal volume. This puts less pressure on the shorter tenors, especially for five years and below,” one other trader said in a text message.
The BTr could raise as much as P200 billion from this offering to match the maturities this month at around P170 billion, and ahead of jumbo maturities in August, the trader added.
Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LANDBANK) are the joint lead issue managers, with BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp., PNB Capital and Investment Corp., and Security Bank Capital Investment Corp. as joint issue managers.
Qualified dealers for the brand new bonds include Asia United Bank, BDO Capital and Investment Corp., BDO Unibank, Inc., BPI Capital Corp., China Banking Corp., Citibank NA, CTBC Bank (Philippines) Corp., DBP, Deutsche Bank AG, East West Banking Corp., The Hong Kong and Shanghai Banking Corp. Ltd., ING Bank NV, Maybank Philippines, Inc., Metropolitan Bank & Trust Co., Bank of Commerce, Philippine National Bank, Rizal Business Banking Corp., Standard Chartered Bank, Security Bank Corp., LANDBANK, and Union Bank of the Philippines, Inc.
The Treasury is trying to raise P245 billion from the domestic market this month — P125 billion via T-bills and P120 billion through T-bonds.
The federal government borrows from local and foreign sources to assist fund its budget deficit, which is capped at P1.54 trillion this 12 months.
