BTr fully awards 7-year T-bond, opens tap facility

With the persistently high demand for T-bond, BTr officials again decided to open the agency’s tap facility to offer the seven-year debt paper Tuesday afternoon. (File Photo: Bureau of the Treasury/Facebook)

MANILA — The rate of the Philippines’ re-issued seven-year Treasury bond grew further to seven percent Tuesday amid investors’ risk-on sentiment.

During the auction last November 27, the same tenor fetched an average rate of 6.974 percent, with National Treasurer Rosalia de Leon attributing the rate increase to investors’ locking in on rates.

“They’re really locking in on the rates anticipating that next year rates will go down as inflation tapers off,” she told journalists after the auction.

Domestic inflation peaked last September-October at 6.7 percent and decelerated to six percent last November.

De Leon also explained that US Federal Reserve officials have become less hawkish due to the trade tensions and expected deceleration of global growth, thus, the expectations that they will not be aggressive in hiking key policy rates anymore.

Tuesday’s T-bond offering was oversubscribed after investors submitted a total of PHP29.920 billion tenders, nearly twice the PHP15 billion offering of the Bureau of the Treasury (BTr). The auction committee made a full award.

With the persistently high demand for T-bond, BTr officials again decided to open the agency’s tap facility to offer the seven-year debt paper Tuesday afternoon.

This is the fourth time that BTr opened its tap facility since last November 22 to accommodate strong demand for the debt paper.

The first tap facility offering is for a five-year T-bond, wherein PHP15 billion worth of debt paper was issued; the second is for a seven-year T-bond last November 27 wherein PHP15 billion worth of securities was issued; and the 10-year T-bond issuance amounting to PHP23 billion last December 4.

De Leon said the tap facility allowed BTr to issue a higher volume of debt instruments without issuing retail treasury bond (RTB).

She said issuances through the tap facilities is even better because they are able to issue longer tenors unlike those issued through RTBs, which are normally limited to periods of three years or five years.

The last RTB issuance was in June, wherein PHP121.8 billion worth of three-year paper was sold during the offer period that ran from May 30 to June 8.