By Aaron Michael C. Sy, Reporter
The Bureau of the Treasury (BTr) fully awarded P30 billion in reissued 10-year Treasury bonds (T-bonds) on Tuesday, despite slightly higher yields, as inflation in June remained below target.
Total bids reached P64.04 billion, more than double the amount on offer, bringing the total outstanding volume for the bond series to P455.6 billion, the BTr said in a statement.
The bonds, which have a remaining life of seven years and two months, were awarded at an average of 6.128%, with accepted yields ranging from 6.1% to 6.135%.
The average rate rose by 0.2 basis point (bp) from the auction on June 10, though still 62.4 bps below the 6.75% coupon when it was first issued.
The awarded yield was also 5.1 bps above the 6.075% quoted for the seven-year benchmark and 3.1 bps higher than the 6.095% for the same bond series in the secondary market ahead of the auction, according to PHP Bloomberg Valuation service data.
“The T-bond average rate was within expectations but slightly higher than the market’s bid before the auction,” a bond trader said in a text message. “It seems investors are comfortable at this level for this specific tenor.”
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., attributed the uptick in yields to recent inflation.
“The T-bonds fetched a higher average rate compared with secondary market yields, as well as its previous issuance, after the slight pickup in June inflation,” he said in a Viber message.
Inflation accelerated to 1.4% in June from 1.3% in May but eased from 3.7% in June 2024. It remained within the Bangko Sentral ng Pilipinas’ (BSP) 1.1% to 1.9% forecast and below the 1.5% median forecast in a BusinessWorld poll of 17 analysts.
June was the fourth straight month that inflation stayed below the BSP’s 2-4% target. Inflation averaged 1.8% in the first half, slightly above the BSP’s 1.6% baseline forecast.
For July, the BTr aims to raise P250 billion from the domestic market — P125 billion in T-bills and another P125 billion in T-bonds.
The government relies on both local and foreign borrowings to help finance its budget deficit, which is capped at P1.56 trillion or 5.5% of gross domestic product this year.
