Treasury yields to investors’ demand

THE Bureau of the Treasury (BTR) on Tuesday fullyawarded its P35-billion worth of reissued 25-year Treasury bonds (T-bonds) despite investors demanding for yield higher than secondary market rates.

“[The] average [rates], while higher than secondary, already provides for policy rate hike to be delivered by the [Monetary Board],” National Treasurer Rosalia V. De Leon told reporters after the auction.

The MB is expected to deliver a 75-basis point (BPS) increase in interest rates at its Thursday meeting to match the recent rate hike implemented by the US Federal Reserve.

The government security has a remaining life of 11 years and 11 months.

The full-award on Tuesday’s auction had an average yield of 8.168 percent, 42.7 basis points higher than the secondary market rate of 7.741 percent for a 12-year bond.

The rates received by the BTR ranged from a low of 7.75 percent to a high of 8.28 percent.

Tuesday’s auction was oversubscribed as the total amount tendered by investors reached P80.953 billion, more than double of the P35-billion offer.

The Treasury has been struggling to fully raise its intended amount in its auctions, especially for Treasury bills, as investors maintain an aggressive stance in asking for higher yields amid increasing interest rates locally and abroad.

Last Monday, the national government was only able to raise a little over half of the proceeds it intended to raise from the T-bills sale. (Related story: https://businessmirror.com. ph/2022/11/15/ng-raises-onlynearlyhalf-of-t-bills-on-offer/)

This month alone, the national government aims to raise P215 billion from the sale of debt papers. The amount covers P75 billion worth of Tbills and P140 billion in treasury bonds.

For the whole year, the government is set to borrow a total of P2.21 trillion, of which 75 percent will be sourced locally while the remaining 25 percent will come from foreign sources.