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Gov’t sells P35B in 10-year bonds amid strong demand

BW FILE PHOTO

By Beatrice M. Laforga, Reporter

THE TREASURY bureau raised P35 billion from reissued 10-year Treasury bonds at an auction on Tuesday, as rates moved sideways amid a strong demand for long-term debt.

The government fully awarded the bonds, which have a remaining life of nine years and 11 months.

The tenor attracted bids worth P70.733 billion, or twice as much as the initial offer, prompting the bureau to open the tap facility to raise another P7 billion.

The average yield on the 10-year bonds was 3.914%, 8.6 basis points lower than its coupon of 4% when the notes were first offered on July 21.

It was also a tad lower than the tenor’s secondary market rate of 3.9006% before the auction.

The sideways movement showed the market’s strong bias on long-tenor debt amid a steady inflation outlook, National Treasurer Rosalia V. de Leon told reporters in a Viber group message.

A bond trader said the rate had fallen within market expectations.

A BusinessWorld poll of 15 analysts last week yielded a median estimate of 4% for July inflation amid lower meat prices after the government eased import tariffs. This is expected to offset the higher costs of oil and other food items.

This could be the first time inflation would fall within the 2-4% target of the central bank since the 3.5% inflation in December. This would also be slower than 4.1% in June but still faster than 2.7% a year earlier.

The Philippine Statistics Authority will report July inflation data on Thursday.

“Lower yields versus firmer bids were attributed to growth outlook concerns as some parts of the country enter a lockdown,” the trader said in a Viber message.

Metro Manila will be under the strictest lockdown level on Aug. 6 to 20 to prevent the further spread of a more contagious Delta coronavirus variant.

The Octa Research Group from the University of the Philippines on Sunday flagged a fresh surge in coronavirus infections in the capital region, suggesting that the Delta variant was freely moving in the community.

The capital region reported 1,740 infections on July 31, the highest since May 10, it said. The weekly average of new coronavirus cases in the region rose by 40% to 1,279 from a week earlier, it added.

The increase could not be easily explained by Alpha or Beta variants that have been managed, OCTA Research fellow Fredegusto P. David said. There might be 300 new Delta variant infections daily in Metro Manila.

Iloilo, Cagayan de Oro City and Gingoog City in Misamis Oriental will also be under a hard lockdown until Aug. 7 due to rising coronavirus infections.

The Treasury bureau is looking at raising P200 billion from the local market this month — P60 billion via weekly offers of Treasury bills and P140 billion from weekly auctions of T-bonds.

The government seeks to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit that is expected to hit 9.3% of economic output.

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