THE GOVERNMENT made a partial award of the dual-tenor reissued Treasury bonds (T-bonds) it offered on Wednesday as the market stayed cautious due to lingering uncertainties over the conflict in the Middle East and the global trade environment.
The Bureau of the Treasury (BTr) raised only P35.076 billion from its dual-tranche T-bond offering, lower than the P40-billion plan, even as total bids reached P63.286 billion or above the amount placed on the auction block.
Broken down, the Treasury borrowed P20 billion as planned via the reissued seven-year bonds, with total bids for the tenor reaching P40.681 billion or more than double the amount on offer.
This brought the outstanding volume for the issue to P321.4 billion, the Treasury said in a statement. It said it made a full award of the tenor as the average rate fetched at the auction was lower than comparable secondary market levels.
The bonds, which have a remaining life of two years and 10 months, were awarded at an average rate of 5.76%. Accepted yields ranged from 5.735% to 5.77%.
The average rate of the reissued papers increased by 5.7 basis points (bps) from the 5.703% fetched for the series’ last award on May 14 and was also 213.5 bps above the 3.625% coupon for the issue.
Still, this was 0.2 bp below the 5.762% fetched for the same bond series and 3.2 bps lower than the 5.792% quoted for the three-year bond — the benchmark tenor closest to the remaining life of the issue — at the secondary market before Wednesday’s auction, based on the PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the BTr.
Meanwhile, the government raised only P15.076 billion from the reissued 25-year T-bonds it offered on Wednesday, short of the P20-billion program, even as total bids reached P22.605 billion.
This brought the outstanding volume for the bond series to P65.1 billion, the BTr said.
The notes, which have a remaining life of 24 years and seven months, were awarded at an average rate of 6.649%. Accepted yields ranged from 6.6% to 6.7%.
The average rate climbed by 17.3 bps from the 6.476% fetched for the series’ last award on March 27 and was also 27.4 bps above the 6.375% coupon for the issue.
This was likewise 2 bps higher than the 6.629% seen for the same bond series and 0.1 bp above the 6.648% quoted for the 25-year bond at the secondary market before Wednesday’s auction, according to the PHL BVAL Reference Rates data from the BTr.
“The rather tepid auction award today reflected market caution, especially for longer-dated securities, as uncertainties on both the US tariff policies and the geopolitical tensions in the Middle East continue to cloud investor appetite. Even for awarded rates, the average rates fetched were higher than the secondary market rates,” a trader said in an e-mail.
The government made a full award of the shorter tenor as its average rate went down amid a slight improvement in risk appetite after Iran and Israel agreed to a ceasefire after exchanging attacks for 12 days, which eased inflation concerns, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
However, the reissued 25-year bond were partially awarded as rates remained high, mirroring long-term US yields’ movements, due to worries over the Trump administration’s fiscal situation, Mr. Ricafort added.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year.
The ceasefire brokered by US President Donald J. Trump between Iran and Israel appeared to be holding on Wednesday a day after both countries signalled that their air war had ended, at least for now, Reuters reported.
Each side claimed victory on Tuesday after 12 days of war, which the US joined with airstrikes in support of Israel to take out Iran’s uranium-enrichment facilities.
Mr. Trump said over the weekend that US stealth bombers had “obliterated” Iran’s program to develop nuclear weapons. Iran says its enrichment activities are for civilian purposes only.
But Mr. Trump’s claim appeared to be contradicted by an initial report by one of his administration’s intelligence agencies, according to three people familiar with the matter.
According to the report, which was produced by the Defense Intelligence Agency, the strikes sealed off the entrances to two of the facilities, but did not collapse underground buildings, said one of the people familiar with its findings.
Some centrifuges remained intact, the Washington Post said, citing an unnamed person familiar with the report.
Israel launched the surprise air war on June 13, attacking Iranian nuclear facilities and killing top military commanders in the worst blow to the Islamic Republic since the 1980s war with Iraq.
Iran, which denies trying to build nuclear weapons, retaliated with barrages of missiles on Israeli military sites and cities.
Oil prices edged higher on Wednesday, finding some respite after plummeting in the last two sessions, as investors assessed the stability of the ceasefire and the diminished prospect of an Iranian blockade of the Strait of Hormuz.
The truce appeared fragile: Both Israel and Iran took hours to acknowledge they had accepted the ceasefire and accused each other of violating it.
Mr. Trump scolded both sides but aimed especially stinging criticism at Israel, telling the close US ally to “calm down now.” He later said Israel called off further attacks at his command. — A.M.C. Sy with Reuters