THE Bureau of the Treasury (BTr) partially awarded bids for the 4-year Treasury bonds (T-bonds) on Tuesday as investors sought higher risk premiums amid the renewed Middle East tensions.
Average yield on the 4-year debt papers climbed by 37.9 basis points to 7.195 percent from the previous 6.816-percent rate last June 23.
That is also higher by 13.5 basis points than the secondary benchmark rate of 7.060 percent for the same tenor.
The Treasury accepted yields ranging from a low of 7.1 percent to a high of 7.228 percent.
Unwilling to pay too much, the Treasury only awarded P25.071 billion out of the P30 billion it intended to borrow for the day.
The auction was still 1.5 times oversubscribed, as bids for the government-backed securities reached P47.624 billion.
Yields edged higher as tensions in the Middle East persist, as well as oil price risks and interest rate concerns, cloud investors’ outlook, Jonathan A. Ravelas, senior adviser at Reyes Tacandong and Co., noted.
Armed strikes exchanged by the United States and Iran went on for 10 days straight despite mediators seeking to revive a truce the two countries signed on June 17.
‘At the same time, inflation and borrowing requirements remain on the market’s radar. As a result, investors sought higher returns before committing funds,’ Ravelas added.
Inflation slowed to 6.4 percent in June from 6.8 percent in May and 7.2 percent in April. However, local pump prices will increase this week, with diesel rising by P10.68 per liter, driven by fresh tensions in the Middle East.
‘These renewed inflation risks could push inflation higher,’ Ravelas said.
He noted that the Treasury’s decision to make a partial award was a ‘prudent move’ to avoid locking in expensive borrowing costs.
‘The Treasury’s decision signals that it has sufficient funding flexibility and can afford to wait for better market conditions, helping keep debt servicing costs in check,’ Ravelas explained.
Next week, the Treasury will auction 91-day, 182-day and 364-day Treasury bills (T-bills), as well as 3-year and 20-year bonds.
The government aims to raise up to P1.120 trillion from the local debt market this third quarter, of which P700 billion will come from T-bonds and P420 billion from T-bills.
For full-year 2026, the Treasury will borrow a total of P2.682 trillion domestically. The national government’s outstanding debt climbed to P18.546 trillion as of end-May.