December 4, 2022

The Bureau of the Treasury (BTr) fully forgiven its newly issued P35 billion 25-year Treasury Notes (T-Bonds) on Tuesday, despite investors demanding a yield in excess of secondary market rates.

“[The] Average [rates]although higher than secondary, already envisages a rate hike to be delivered by [Monetary Board]National Treasurer Rosalia V. De Leon told reporters after the auction.

The MB is expected to deliver a 75 basis point (bps) rate hike at Thursday’s meeting to match the recent US Federal Reserve rate hike.

The State Security has a remaining term of 11 years and 11 months.

The full bid at Tuesday’s auction had an average yield of 8.168 percent, 42.7 basis points higher than the secondary market rate of 7.741 percent for a 12-year bond.

Rates received by the BTr ranged from a low of 7.75 percent to a high of 8.28 percent.

Tuesday’s auction was oversubscribed as the total amount bid by investors reached 80.953 billion pesos, more than double the 35 billion pesos offered.

The Treasury has scrambled to fully increase the intended amount in its auctions, particularly for Treasury bills, as investors maintain an aggressive stance in demanding higher yields amid rising interest rates both domestically and internationally.

Last Monday, the national government was able to raise just over half of the proceeds it wanted from T-bills sales. (Related story:

This month alone, the national government plans to raise 215 billion pesos from debt sales. The amount includes T-bills worth P75 billion and government bonds worth P140 billion.

For the full year, the government is expected to borrow a total of 2.21 trillion pesos, 75 percent of which will come from local sources while the remaining 25 percent will come from foreign sources.