Treasury returns to investor demand

The Bureau of the Treasury (BTr) on Tuesday fully granted the re-issued P35 Billion Treasury Notes (Treasury Notes) despite investors’ demand for returns above secondary market rates.

“[The] modified [rates]although it is higher than the secondary, but it actually stipulates that the policy price has been raised before [Monetary Board]National Treasurer Rosalia F. De Leon told reporters after the auction.

MB is expected to deliver a 75 basis point (BPS) increase in interest rates at its meeting on Thursday to match the latest interest rate hike implemented by the US Federal Reserve.

And there is 11 years and 11 months left for government security.

The average yield on the full award at Tuesday’s auction was 8.168 percent, up 42.7 basis points from the secondary market rate of 7.741 percent for the 12-year note.

The rates BTr received ranged from 7.75 percent to 8.28 percent.

It was oversubscribed in an auction on Tuesday with total bids from investors amounting to 80.953 billion pesos, more than double the bid of 35 billion pesos.

The Treasury Department has struggled to fully raise the intended amount in its auctions, especially for Treasury bills, as investors maintain a tough stance in demanding higher yields amid increasing interest rates both domestically and abroad.

Last Monday, the national government was only able to raise just over half of the proceeds it intends to raise from the sale of treasury bills. (Related story: https://businessmirror.com.ph/2022/11/15/ng-raises-only-nearlyhalf-of-t-bills-on-offer/)

This month alone, the national government aims to raise 215 billion pounds from the sale of debt securities. The amount covers 75 billion pesos in treasury bills and 140 billion pounds in treasury bonds.

Over the entire year, the government is set to borrow a total of 2.21 trillion pesos, of which 75 percent will be provided domestically while the remaining 25 percent will come from foreign sources.

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