THE Bureau of the Treasury (BTr) fully awarded P35 billion in reissued 10-year Treasury Bonds (T-bonds) despite the security fetching a higher rate.
The security fetched an average rate of 5.13 percent, surging by 44.1 basis points from the previous auction’s 4.689 percent.
This is also higher than the secondary benchmark rates from the PHP Bloomberg Valuation (BVAL) Service.
The BVAL rate for the 10-year tenor is at 4.9646 percent. According to the BTr, that’s an increase of 16.54 basis points.
Likewise, Tuesday’s rate is also above by 21.49 basis points from the BVAL rate for the debt paper at 4.9151 percent.
Nonetheless, the auction was oversubscribed as total bids reached P55.37 billion.
With a remaining life of nine years and eight months, the security is set to mature on July 22, 2031.
National Treasurer Rosalia V. De Leon attributed the rise in bid rates to speculation that monetary authorities may start hiking rates.
“While inflation has decelerated, [the] market [is] still concerned inflation [remains] higher than target,” De Leon told reporters after the auction. “And with strong third-quarter GDP [gross domestic product] performance, [the market is] speculating that BSP [Bangko Sentral ng Pilipinas] may start raising rates.”
The Philippine Statistics Authority announced on Tuesday the Philippine economy grew 7.1 percent in the third quarter.
This is faster than the contraction of 11.6 percent in the July to September period last year but slower compared to the 12-percent growth in the second quarter this year.
With year-to-date growth reaching 4.9 percent, Socioeconomic Planning Secretary Karl Kendrick T. Chua said the economy is on track to reach the high-end of the government’s full-year target of 4-percent to 5-percent growth.
The Treasury aims to raise P140 billion through auctioning off T-bonds while another P60 billion is programmed to be borrowed through Treasury bills.
The national government’s outstanding debt as of end-September this year ballooned to another record high of P11.92 trillion, already breaching the government’s expected level of debt stock of P11.73 trillion by the end of this year.
This was also higher by 27.2 percent or P2.55 trillion than P9.37 trillion in the same period in 2020.
Government’s attempt to recover losses caused by its measures to stem the Covid-19 infection rate is being fueled by debt. And last Monday’s announcement by the BTr confirms that as it announced plans to auction off, for the second time this year, Retail Treasury Bonds (RTB).
The National Treasurer said finance officials are still packaging the debt papers: it’s tenor and launch date. Still, De Leon said the lower inflation print in October and better than expected third-quarter GDP growth bodes well for having another RTB offering.
The Treasury is set to borrow P200 billion from the local debt market in November, the same amount it programmed to borrow last month.