THE Bureau of the Treasury fully awarded P30 billion in reissued 10-year Treasury Bonds (T-bonds) as average rate inched up “within market expectations.”
With a remaining term of 9 years and five months, the tenor fetched an average rate of 3.066 percent, which was 34.2 basis points above the 2.724 percent average rate in the previous auction.
National Treasurer Rosalia V. De Leon expressed she was satisfied with the auction results, with total bids for the security amounting to P63 billion; twice the offer.
De Leon said the Bloomberg valuation for the security is higher at 2.968 percent “given inflation reading for January and expectation this year.”
“Good to see strong participation in the long end at relatively low pick up in yields,” she added.
The government would release official inflation data for January on February 5. Bangko Sentral ng Pilipinas forecasts the country’s inflation rate for the month to settle within 3.3 to 4.1 percent, slightly higher than the 2-percent to 4-percent target range set by the government for the year.
In December 2020, the country’s inflation rate accelerated to 3.5 percent, coming from 3.3 percent in November 2020 and 2.5 percent in December 2019. Full-year inflation was pegged at 2.6 percent, within government targets.
De Leon said she expects to see higher rates in the near-term for longer tenors.
“Some upward adjustments in the long-end but front-end will remain with abundant liquidity and heavy bias on this segment.”
The Treasury’s decision to fully award the reissued 10-year securities brought the total outstanding volume for the series to P90 billion.
For this month, the Treasury programmed to borrow P140 billion from the local debt market, the same amount it planned to raise in January.
The Treasury reported on Tuesday that the country’s debt in 2020 reached a new record-high of P9.795 trillion, up by 26.7 percent from P7.731 trillion as of end-2019 due to higher funding requirements to respond to the national and health crises.
Government spending for its Covid-19 response pushed the country’s debt-to-GDP ratio in 2020 to a 14-year-high of 54.5 percent.
This was also slightly higher than the Duterte government’s projection of 53.5 percent for 2020 and a target of 40.2 percent before it imposed an 80-day lockdown over key economic hubs.
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