Gov’t sells P25B of reissued bonds

Published December 6, 2022, 2:53 PM

by Chino S. Leyco

The Bureau of the Treasury made a full-award on Tuesday, Dec. 6, after the benchmark interest rate on debt falling due in almost 12-years settled within the secondary market levels.

The interest rate of the reissued 25-year IOUs, with a remaining life of 11-years and 11-months, fetched 7.189 percent, lower than the original coupon rate of 9.25 percent sold in November 2009.

The rate was slightly higher than the prevailing secondary market rates of 7.116 percent to 7.179 percent.

The Treasury awarded P35 billion as planned even as investors were willing to lend as much as P79.44 billion of the reissued 25-year Treasury bonds.

“We decided to make a full-award given the strong demand and the significant decline in rates with the average mirroring the secondary levels. This comes even as November inflation settled at eight percent,” National Treasurer Rosalia V. De Leon told reporters after the auction.

If pricing is good, de Leon noted that the government would prefer longer tenors in its borrowing program for next year.

“Investors expect inflation has peaked [last month],” De Leon said, noting that the market also expects a slower pace of interest rate hike from the central bank.