THE Bureau of the Treasury fully awarded P35-billion in reissued 20-year Treasury Bonds (T-bonds) on Tuesday on the back of strong investor appetite.
The auction was oversubscribed by almost 1.8-times as total bids for the security reached P61.91 billion.
With a remaining life of 19 years and 3 months, the security is set to mature on September 9, 2040.
However, the average rate for the security dropped to 5.084 percent, 25.7 basis points below the previous auction’s 5.341 percent.
Despite this, National Treasurer Rosalia V. De Leon said the average rate for the security is still aligned with the secondary benchmark rate.
“Saw strong reception for reopening of 25-11 with demand 1.5-times [the] offer. Rates for this security is aligned with secondary level yielding positive real rates,” De Leon said.
She further said the demand for longer-term securities is being driven by “market expectation that inflation will be tamed going into next year.”
On top of the primary auction, the Treasury also decided to open the tap facility for an additional P5-billion offering.
Sought whether the Treasury is seeing an opportunity to conduct domestic liability management exercise in the second half of the year given the strong investor interest on longer tenors, De Leon said they “will continue watching market appetite,” adding that it “depends on real rates.”
For this month alone, the Treasury is aiming to borrow P215 billion from the local debt market, up by 26 percent compared to only P170 billion it programmed to borrow per month in April and May. The bulk of the programmed domestic borrowings for June, or P140 billion, will now be raised through Treasury Bonds with longer tenors while the rest of the amount is planned to be raised by auctioning off P75 billion in T-bills.
For this year, the national government has set a P3.03-trillion gross borrowing program, roughly the same amount it borrowed in 2020.
Eighty percent of the amount is programmed to be raised through domestic sources while the remaining 20 percent is expected to come from foreign sources. The country’s outstanding debt has also reached a new record-high of P10.77 trillion as of end-March this year, up by 27.1 percent from P8.48 trillion a year ago.
Dominguez had also said they still expect the country’s debt-to-GDP ratio this year to still be below the 60-percent threshold.
The Cabinet-level Development Budget Coordination Committee also recently slashed its growth projection for the Philippine economy this year to 6 to 7 percent from its previous forecast range of 6.5 to 7.5 percent due to the emergence of new Covid-19 variants and the re-imposition of stricter lockdown measures in the National Capital Region Plus during the second quarter of this year.
The Philippine Statistics Authority earlier reported that the country’s GDP contracted 4.2 percent in the first quarter of the year, marking the economy’s fifth consecutive quarter of decline.
Socioeconomic Planning Secretary Karl Kendrick T. Chua has said the economy needs to grow an average of 10 percent in the next three quarters to achieve the low-end of the government’s target.
Read full article on BusinessMirror