Gov’t makes full award of bonds at higher rate on strong demand
Last November 23, 2016, Melissa Luz T. Lopez, a Senior Reporter, posted some latest news about Financing on the Business World Online.
According to her report the Government made a full award of
reissued Treasury bonds (T-bonds) at an auction last Tuesday on November 22,
2016 among strong demand, as yields climbed ahead of an expected hike in
interest rates by the US Federal Reserve.
It is very impressive that the Bureau of the Treasury
raised P25 billion as planned from the reissued five-year T-bonds with a
remaining life of three years and nine months at that auction.
The offer was slightly oversubscribed as bids reached
P26.128 billion. The securities, which will mature on Aug. 20, 2020, fetched an
average rate of 3.977%, up by 37.2 basis points (bp) from the 3.605% yield on
the seven-year T-bonds during the Oct. 11 auction.
The government raised P11.772 billion from those bonds last
month, less than half its planned P25-billion financing amid investor caution
ahead of the US Fed’s
Nov. 1-2 meeting, which eventually saw US rates unchanged.
The rate on that day of November 22 also went up from the
3.375% coupon rate when the notes were first issued last Aug. 20, 2015.
However, the average yield fetched remained below the 4.8268% rate seen for the
five-year tenor but higher than the
3.87% quoted for the four-year paper prior to Tuesday’s auction.
At the market’s
close, the yield on the five-year papers went up to 4.8464%, while the
four-year bond was quoted at 4.0095%.
Bids for the reissued T-bonds ranged between a low of 3.7%
to a high of 4.25%, according to Treasury data.
The National Treasurer also noted the expected Fed interest rate increase by December, the impact of which will come into play as to when the government will pursue its planned issuance of at least $500 million in dollar-denominated bonds early next year.
Reference:
The National Treasurer also noted the expected Fed interest rate increase by December, the impact of which will come into play as to when the government will pursue its planned issuance of at least $500 million in dollar-denominated bonds early next year.
Melissa Lopez also stated in her report that the government
is looking to borrow up to P135 billion from the domestic market for this
quarter -- P60 billion worth of Treasury bills and P75 billion worth of T-bonds
-- but has made several partial awards in past auctions as it sought to cap
borrowing costs, amid plans by the Duterte administration to ramp up public
spending on social services and infrastructure.
Reference:
http://www.bworldonline.com/content.php?section=Finance&title=gov&8217t-makes-full-award-of-bonds-at-higher-rate-on-strong-demand&id=136751
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