BTr partially awards T-bonds

FILE: Bureau of the Treasury. (Photo: Bureau of the Treasury/Facebook)

MANILA – The Bureau of the Treasury (BTr) on Wednesday partially awarded bids for the new seven-year Treasury bonds (T-bonds).

The coupon rate was set at 6.375 percent.

The auction was 1.8 times oversubscribed as the total submitted bids amounted to PHP55.1 billion.

The BTr raised PHP24.8 billion out of the PHP30 billion offering.

In a comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the average auction yield was higher than the comparable 7-year PHP Bloomberg Valuation Service (BVAL) yield at 6.28 percent.

“This is still higher compared to 6.097 percent in the previous 7-year Treasury bond auction on June 20, 2023 as the PHP BVAL yields corrected higher since June 2023 due to higher US Treasury yields since then,” he said.

Ricafort traced the rate results to the hawkish signals locally in terms of possible local policy rate hike to better manage inflation.

Headline inflation settled at 5.4 percent in June, still above the government’s 2 percent to 4 percent target.

“(This) is also after hawkish local signals recently, particularly on no possible premature local policy rate cut and even a possible local policy rate hike amid market expectations of a possible +0.25 Fed rate hike on July 26, 2023, but reduced odds of a second Fed rate hike after July 26, 2023,” Ricafort said.

The Bangko Sentral ng Pilipinas maintained key rates in the last two consecutive rate setting meeting.

The Monetary Board is scheduled to hold its next rate setting meeting on Aug. 17.