THE Bureau of the Treasury only awarded less than half of its P35-billion offering for reissued 7-year Treasury Bonds (T-bonds) as rates spiked with the September inflation figure going beyond the higher end of the central bank’s target.
The Treasury only awarded P15.578 billion on Tuesday’s auction, which was oversubscribed with total submitted bids amounting to P52.79 billion.
The rates fetched by the tenor averaged 4.207 percent, jumping by 38.1 basis points from 3.826 percent in the previous auction.
With a remaining life of 6 years and 10 months, the debt paper is set to mature on August 12, 2028. Its coupon rate is at 3.75 percent.
Inflation eased to 4.8 percent in September, slightly lower than 4.9 percent in August. While it is within the range of monetary authorities’ projection of 4.8 to 5.6 percent, the previous month’s rate exceeded the 2 percent to 4 percent targeted by the Bangko Sentral ng Pilipinas (BSP) for the year.
“Partial award as rates significantly moved following the September inflation print. While lower than August and market forecast, inflation is much higher than the high end of the BSP target,” National Treasurer Rosalia V. De Leon said.
Moving forward, De Leon said they expect investors would seek higher rates given that the BSP expects inflation this year to average at a rate beyond its target.
How this would impact the Treasury’s fundraising for the rest of the year, De Leon pointed to the government’s buffer as “strong.”
“We have strong cash buffer to allow us to reject if we find bids unacceptable.”
For this month, the Treasury is aiming to raise P200 billion from the local debt market. This year, the national government programmed to borrow a total of P3.1-trillion, most of which is expected to be raised through domestic sources.
The government borrows to meet its spending requirements as well as to finance its budget deficit.
As of end-August this year, the national government’s outstanding debt has hit a new record-high of P11.64 trillion, up by more than a fifth from P9.62 trillion a year ago.