THE GOVERNMENT partially awarded the reissued Treasury bonds (T-bonds) it offered on Tuesday as the tenor’s rate increased following the release of data showing inflation exceeded the central bank’s target last month.
The Bureau of the Treasury (BTr) raised just P15.58 billion via the reissued seven-year T-bonds it auctioned off on Tuesday, less than half of the programmed P35 billion, even as the tenor attracted P52.79 billion in total bids.
The notes, which have a remaining life of six years and 10 months, fetched an average rate of 4.207%, 38.1 basis points higher than the 3.826% quoted when the series was last offered on Sept. 21.
Had the Treasury made a full award of its offer on Tuesday, the reissued bonds would have fetched an average rate of 4.276%.
The average rate fetched for the seven-year papers on Tuesday was also higher than the 3.9089% quoted for the tenor at the secondary market prior to the auction, based on the PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System’s website.
National Treasurer Rosalia V. de Leon said in a Viber message to reporters that the tenor’s rate rose significantly following the release of September inflation data.
Headline inflation stood at 4.8% in September, slowing from the 4.9% logged in August but faster than the 2.3% print recorded in the same month last year, the Philippine Statistics Authority reported on Tuesday.
The latest figure is below the 5% median in a BusinessWorld poll conducted late last week and is at the low end of the 4.8%-5.6% estimate given by the Bangko Sentral ng Pilipinas (BSP) for the month.
Inflation averaged at 4.5%, still above the BSP’s 2-4% target and 4.4% forecast for this year.
A bond trader said in a phone interview that inflation breached the BSP’s target again last month even as the print fell below market expectations, causing the seven-year debt’s rate to rise.
The US Federal Reserve’s hints on its plan to taper its asset purchases and raise rates also affected local yields, the trader added.
The Fed last month said it could start reducing its monthly bond purchases as soon as November and signaled interest rate increases may follow more quickly than expected.
The BTr is looking to raise P200 billion from the local market this month: P60 billion from weekly offers of Treasury bills and P140 billion from weekly auctions of T-bonds.
The government wants to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit seen to hit 9.3% of gross domestic product. — Jenina P. Ibañez