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Gov’t fully awards 10-year bonds

THE GOVERNMENT made a full award of the 10-year Treasury bonds (T-bonds) it auctioned off on Wednesday even as its rate was slightly higher than the secondary market level due to worries over the highly infectious Delta variant of the coronavirus disease 2019 (COVID-19).

The Bureau of the Treasury (BTr) raised P35 billion as planned from its auction of fresh 10-year bonds on Wednesday and even opened its tap facility to borrow another P5 billion via the tenor as the offering was two times oversubscribed, with total tenders reaching P72.956 billion.

The 10-year notes fetched a coupon rate of 4%, slightly higher than the 3.927% quoted for the tenor at the secondary market, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

The coupon was also 105.2 basis points higher than the 2.875% coupon for the BTr’s most recent issuance of fresh 10-year papers, which was on July 9, 2020.

National Treasurer Rosalia V. de Leon said the bond auction saw good participation as the rates seen were aligned with secondary market levels.

A bond trader, meanwhile, said the tenor’s coupon fell within the higher end of market expectations due to the growing concerns over the impact of the Delta variant of COVID-19 on the economy’s recovery.

“One reason is that people are now starting to monitor the Delta variant, which may result in another round of restrictions that may limit economic activities,” the trader said via Viber.

President Rodrigo R. Duterte on Monday evening said the government may have to tighten restrictions again to avoid the further spread of the highly contagious Delta variant.

Metro Manila mayors also asked the interagency task force on the pandemic response to recall an earlier decision allowing children to go outdoors amid the emerging threat of the new variant.

The Health department last week reported that cases of the Delta variant of COVID-19 in the country stood at 35. Of these, 11 were locally acquired, while five were cases from returning overseas Filipinos. Eight of these cases are active while three have died.

There were 4,516 new COVID-19 cases recorded in the country on Tuesday, which brought the number of active infections to 46,806.

Analysts have warned that a return to strict lockdown measures could dampen recovery prospects as this would limit economic activity and affect consumer and business sentiment.

The Treasury is looking to raise P235 billion from the local market this month: P60 billion via weekly offers of Treasury bills and P175 billion from weekly auctions of T-bonds.

The government wants to borrow P3 trillion this year from domestic and external sources to help fund a budget deficit that is seen to hit 9.3% of gross domestic product. — Beatrice M. Laforga

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