The Philippine Bureau of the Treasury (BTr) made a partial award of reissued Treasury bonds (T-bonds) on Tuesday, with the government borrowing only P25.071 billion via the reissued seven-year bonds, below the P30-billion target.
The T-bonds were awarded at an average rate of 7.195%, a significant increase from the 6.816% fetched for the series' last award on June 23. The accepted yields ranged from 7.1% to 7.228%, jumping by 37.9 basis points from the previous issue.
The partial award was made to cap the increase in the average yield for the issue, as market players asked for higher yields amid renewed market volatility and inflation concerns due to rising oil prices driven by the Middle East conflict.
The reissued papers, which have a remaining life of four years and five days, brought the outstanding volume for this bond series to P501.7 billion, according to the BTr.
The Treasury's decision to make a partial award instead of a full rejection, which was made last week, is likely due to the impact on banks' books. The central bank recently allowed banks and quasi-banks to temporarily exclude unrealized or paper losses on peso government securities resulting from market volatility from the computation of their regulatory capital.
The global market remains volatile due to Middle East tensions, with oil prices seeing a sharp swing to near six-week highs before retreating. The Philippines, which sources about 90% of its oil supply from the Middle East, has been one of the most affected by the global oil crisis.
The BTr wants to raise P410 billion from the domestic market this month, with diesel and kerosene prices set to climb by more than P10 per liter this week due to the conflict. The government is borrowing from local and foreign sources to help fund its budget deficit, which is capped at P1.659 trillion or 5.4% of gross domestic product this year.
