Reissued bonds fetch lower rates as market expects more BSP cuts

THE GOVERNMENT made a full award of the reissued Treasury bonds (T-bonds) it offered on Tuesday at a lower average yield amid strong demand and as expectations of easing inflation bolstered bets of another rate cut by the Bangko Sentral ng Pilipinas (BSP) as early as this month.

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The Bureau of the Treasury (BTr) raised P30 billion as planned via the reissued seven-year bonds it offered on Tuesday as total bids reached P59.869 billion or nearly twice as much as the amount placed on the auction block.

This brought the total outstanding volume for the bond series so far to P321.7 billion, the Treasury said in a statement.

Following the strong demand for Tuesday's offer, the BTr opened its tap facility window to raise P5 billion more through the papers.

The bonds, which have a remaining life of five years and one month, were awarded at an average rate of 5.887%. Accepted bid yields ranged from 5.8% to 5.899%.

The average rate for the reissued papers was down by 5.6 basis points (bps) from the 5.943% fetched for the series' last award on April 29 and was 48.8 bps lower than the 6.375% coupon for the issue.

It was likewise 1.1 bps below the 5.898% quoted for the five-year bond but 2.9 bps higher than the 5.858% seen for the same bond series at the secondary market before Tuesday's auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.