THE Bureau of the Treasury (BTr) raised a total of P35 billion from long-term debt papers on the back of strong demand from investors locking in yields before borrowing costs further ease.
On Tuesday, the Treasury fully awarded bids for the dual-tranche T-bonds as combined demand for the two tenors amounted to P138.118 billion, nearly four times oversubscribed the P35-billion offering.
Broken down, the Treasury awarded the full P20 billion on offer for the reissued 5-year T-bonds with a remaining term of four years and seven months.
Tenders for the security reached P71.687 billion, while its coupon rate stood at 6.375 percent.
The average annual rate for the security declined to 5.649 percent, down by 12.3 basis points (bps) from the 5.772 percent recorded two months ago. Yields were as low as 5.635 percent to as high as 5.658 percent.
Meanwhile, the reissued 10-year government IOUs were fully awarded at P15 billion, after the Treasury received offers of P66.431 billion or about 4 times oversubscribed the programmed offering.
The average rate of the 10-year T-bonds also dropped to 5.894 percent, 14.9 bps lower than the previous auction’s 6.034 percent. Rates were as low as 5.889 percent to as high as 5.898 percent.
According to Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), yields of the 5-year and 10-year T-bonds declined as both offerings were oversubscribed amid expectations of lower interest rates.
Ricafort said investors are anticipating that the Bangko Sentral ng Pilipinas (BSP) will deliver a 25 bps rate cut during its last rate-setting meeting of the year on December 11.
Dovish signals from BSP Governor Eli M. Remolona Jr., Finance Secretary Ralph G. Recto, and Monetary Board Member Benjamin Diokno encouraged investors to lock in yields before they fall further, added the RCBC executive.
The national government’s outstanding debt stood at P17.455 trillion as of the end of September, down by 0.07 percent from P17.468 trillion as of end-August.
Despite this, the latest figures were still higher year-on-year by 9.83 percent from P15.893 trillion.
The Treasury will borrow a total of P2.6 trillion in 2025 to plug its estimated budget deficit of P1.561 trillion.
This November, the Treasury will raise a total of P158 billion from local lenders, of which P88 billion will come from T-bills and P70 billion from Treasury bonds.