Treasury grants less than half of reissued Treasury bond supply
The Treasury Office awarded less than half of its 35 billion peso bid for reissued 7-year treasury bills (T-bonds) as rates soared with the inflation figure of September exceeding the upper end of the central bank target.
The Treasury allocated just 15.578 billion pesos in Tuesday’s auction, which was oversubscribed with a total of submitted bids amounting to 52.79 billion pesos.
The tenor’s yields averaged 4.207%, up 38.1 basis points from 3.826% at the previous auction.
With a residual maturity of 6 years and 10 months, the debt instrument will mature on August 12, 2028. Its nominal interest rate is 3.75%.
Inflation fell to 4.8% in September, slightly below 4.9% in August. While in the monetary authorities’ projection range of 4.8 to 5.6%, the rate for the previous month exceeded the 2% to 4% targeted by the Bangko Sentral ng Pilipinas (BSP) for the year.
“Partial attribution, because the rates have moved considerably following the impression of inflation in September. Although lower than August and market forecasts, inflation is well above the upper end of the BSP target, ”said National Treasurer Rosalia V. De Leon.
Going forward, De Leon said they expect investors to seek higher rates as the BSP expects inflation this year to average above its target. .
How would this impact treasury fundraising for the rest of the year, De Leon stressed that the government’s buffer was “strong”.
“We have a strong cash reserve to enable us to reject if we find offers unacceptable.”
For this month, the Treasury aims to raise 200 billion pesos on the local debt market. This year, the national government planned to borrow a total of 3.1 trillion pesos, most of which is expected to be raised by domestic sources.
The government borrows to meet its spending needs as well as to finance its budget deficit.
At the end of August of this year, the national government debt stock reached a new record high of 11.64 trillion pesos, up more than a fifth from the 9.62 trillion pesos. pesos a year ago.