Government sells P35B in 10-year bonds in the face of strong demand


Of Beatrice M. Laforga, reporter

The tax office has collected 35 billion pesos of re-issued 10-year government bonds at auction Tuesday as rates moved sideways amid strong demand for long-term bonds.

The government has fully awarded the bonds with a remaining term of nine years and eleven months.

The tenor withdrew bids worth pesos 70.733 billion, or double the original offer, prompting the bureau to open the branch facility to raise an additional pesos of 7 billion.

The average yield on the 10-year bonds was 3.914%, 8.6 basis points lower than the 4% coupon when the bonds were first offered on July 21.

It was also a bit lower than the tenor’s pre-auction secondary market rate of 3.9006%.

The sideways movement shows the market’s strong bias towards long-term debt amid a steady inflation outlook, national treasurer Rosalia V. de Leon told reporters in a statement from the Viber group.

A bond trader said the price was down in line with market expectations.

ON Business world A poll of 15 analysts last week found an average estimate of 4% for July inflation amid lower meat prices after the government eased import dutiesffS. This is expected to work outffset the higher cost of oil and other foods.

That could be. being fifor the first time inflThe inflation rate would fall below the central bank’s 2-4% target since December’s 3.5% inflation rate. This would also be slower than 4.1% in June, but still faster than 2.7% a year earlier.

The Philippine Statistics Bureau reported in July inflation dates on Thursday.

“Lower yields compared to fi“rmer bids were blamed on concerns about growth prospects as some parts of the country will be locked down,” the trader said in a Viber message.

Metro Manila will be under the strictest lockdown from August 6-20 to prevent the further spread of a more contagious variant of delta coronavirus.

The University of the Philippines’ Octa Research Group noted a renewed spike in coronavirus infections in the capital region on Sunday, suggesting the Delta variant is moving freely around the community.

The capital region reported 1,740 infections on July 31, the highest level since May 10, it said. The weekly average of new coronavirus cases in the region rose 40% from a week earlier to 1,279, it said.

The increase cannot be explained simply by alpha or beta variants being managed, said Fredegusto P. David, OCTA Research Fellow. There could be 300 new Delta variant infections every day in Metro Manila.

Iloilo, Cagayan de Oro City and Gingoog City in Misamis Oriental will also be severely banned until August 7th due to rising coronavirus infections.

The tax bureau plans to raise pesos 200 billion from the local market this month – pesos 60 billion through weekly treasury bills offerings and pesos 140 billion from weekly T-bond auctions.

The government is attempting to borrow P3 trillion from domestic and external sources this year to fund a draft budgetficit, which is expected to reach 9.3% of economic output.

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