Bond yields rise on weak demand

THE GOVERNMENT partially awarded the Treasury bonds (T-bonds) it offered on Tuesday, with demand weakening as investors turned cautious on longer tenors due to concerns over the fallout from the prolonged Middle East conflict.

- Aaron Michael C. Sy and Erika Mae P. Sinaking with Reuters

The Bureau of the Treasury (BTr) borrowed just P94.51 billion via the reissued 10-year bonds it auctioned off, below the P20-billion offering, even as total bids reached P38.506 billion, or nearly twice the amount up for sale.

This brought the outstanding volume for the bond series to P179.5 billion, the Treasury said in a statement.

The reissued bonds, which have a remaining life of seven years and five months, were awarded at an average rate of 6.473%. Accepted yields ranged from 6.4% to 6.5%.

The average yield of the reissued papers rose by 61.4 basis points (bps) from the 5.859% fetched for the series’ last award on Feb. 10 but was still 15.2 bps below the 6.625% coupon for the issue.

This was also 20.03 bps above the 6.727% fetched for the same bond series and 20.41 bps higher than the 6.2689% quoted for the seven-year paper — the benchmark tenor closest to the remaining life of the issue — at the secondary market before Tuesday’s auction, based on the PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

The Treasury said it made a partial award of the bonds to cap the rise in yields.