BTr fully awards new 10-year T-bonds on strong demand

  • The government fully awarded the fresh Treasury bonds (T-bonds) it offered on 18 Oct 22 on strong demand for higher-yielding instruments amid expectations of more rate hikes here and abroad.
  • The Bureau of the Treasury (BTr) raised PHP35bn as planned via the fresh 10-year T-bonds it auctioned off on 18 Oct 22, with total tenders reaching PHP58.411bn.
  • The debt papers were awarded at a coupon rate of 7.5%, 29.81 basis points (bps) higher than the 7.2019% quoted for the 10-year tenor at the secondary market before the auction.
  • Accepted rates ranged from 7% to 7.5% for an average of 7.344%. A trader likewise said the auction result was “well-within our expectations given recent statements from the Bangko Sentral ng Pilipinas (BSP).”
  • “With analysts now thinking that overnight reverse repurchase rate will reach 5%, seven- to 10-year tenors will likely be 250 to 300 bps higher,” the trader said in a text message.
  • BSP Governor Felipe M. Medalla in the week of 10 Oct 22 said the central bank will consider another big rate hike in their 17 Nov 22 policy meeting to support the PHP and prevent its depreciation from further stoking inflation.
  • Mr. Medalla said they are looking at a 50-bp or 75-bp increase in Nov 22 to help cool inflation and ease currency pressures stemming from a strong USD amid the Fed’s hawkish stance.
  • The BTr wants to raise PHP200bn from the domestic market on Oct 22, or PHP60bn through Treasury bills and PHP140bn from T-bonds. The government borrows from local and external sources to help plug a budget deficit capped at 7.6% of gross domestic product in 2022.

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