THE GOVERNMENT made a full award of the Treasury bonds (T-bonds) it offered on Tuesday on the back of strong demand for higher-yielding instruments amid developments in the United States.
The Bureau of the Treasury (BTr) raised P15 billion as planned via the reissued five-year bonds it auctioned off on Tuesday as total bids reached P55.841 billion, or almost thrice the amount on offer.
This brought the outstanding volume for the series to P249.7 billion, the Treasury said in a statement.
The bonds, which have a remaining life of four years and five months, were awarded at an average rate of 5.954%. Accepted yields ranged from 5.92% to 5.973%.
The average rate of the reissued papers jumped by 44.6 basis points (bps) from the 5.508% fetched for the series’ last award on Oct. 3. However, this was 54.6 bps lower than the 6.5% coupon for the issue.
Meanwhile, this was 1.7 bp below the 5.971% seen for the same bond series and 0.1 bp lower than the 5.955% quoted for the five-year bond at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.
The government made a full award of its T-bond offer as the average rate was “broadly in line with prevailing secondary market rates,” the BTr said.
The BTr saw strong demand for its offering amid improved risk appetite among investors following US yield movements after US President-elect Donald J. Trump selected Scott Kenneth Homer Bessent as the US Treasury Secretary, a trader said in a text message.
“This is also the last five-year issuance for the year,” the trader added.
Mr. Trump’s election win has continued to drive US Treasury yields mostly higher on expectations of “more protectionist policies that could lead to higher US inflation and wider budget deficits that could lead to fewer Federal Reserve rate cuts,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Mr. Trump’s pick to be US Treasury Secretary proved to be a balm for the bond market, while the dollar followed yields lower in a move poised to influence trading in Asia on Tuesday, Reuters reported.
The choice of prominent investor Mr. Bessent made late on Friday, rippled through markets on Monday, after days of speculation over who Mr. Trump would choose to be essentially the highest-ranking US economic official.
Treasury yields, which move opposite to prices, fell sharply, with the benchmark 10-year yield touching its lowest level in more than two weeks. Treasury yields had been rising at a torrid pace, partially due to concerns that Mr. Trump’s presidency would dramatically widen the federal deficit.
But Mr. Bessent was seen as someone who might moderate any negative impact of Mr. Trump’s fiscal policies. Some strategists said his nomination was a relief as he understands markets and his appointment could reduce the severity of potential tariffs, which are favored by Mr. Trump.
Tuesday’s auction was the government’s last T-bond offering for November. The Treasury raised P30 billion as planned via bonds this month as it made full awards at its two auctions.
Overall, the BTr was able to raise the programmed P90 billion via the domestic market in November — P60 billion through Treasury bills (T-bills) and P30 billion from T-bonds.
For December, it plans to raise P75 billion from the local debt market, or P60 billion in T-bills and P15 billion in T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 6.1% of gross domestic product this year. — Aaron Michael C. Sy with Reuters
