Philippine Treasury Raises 6.03 Billion Pesos in Partial Bond Award
Yields jumped on oil price fears, forcing the government to reject all bids for seven-year bonds and only partially fill the 10-year tranche.
The Bureau of the Treasury raised 6.032 billion pesos in a dual-tranche bond auction. This fell far short of the 30 billion peso target. Total bids reached 43.267 billion pesos. The government rejected every bid for the seven-year bonds. It also only partially awarded the 10-year notes.
Rising oil prices drove yields higher. Geopolitical tensions in the Middle East unsettled investors. The 10-year US Treasury yield hit its highest level since 2007. US crude rose 1.82% to 103.24 dollars a barrel. Brent crude gained 1.6% to 107.37 dollars.
Seven-year bonds face total bid rejection
Bids for the reissued seven-year bonds reached 21.567 billion pesos. This exceeded the 20 billion peso offer block. The Treasury turned down all tenders. A full award would have set the average rate at 7.435%. This rate was 44.7 basis points above the previous award.
The potential yield was also 106 basis points higher than the 6.375% coupon. It stood 13.8 basis points above the secondary market price. The rejection reflected trader hesitation on longer tenors. Higher yields made the issuance less attractive to buyers.
Ten-year notes award yields 7.525 percent
The government borrowed 6.032 billion pesos from the 10-year tranche. This was below the 10 billion peso plan. Bids for this tenor reached 22.06 billion pesos. The accepted average rate was 7.525%. Yields ranged from 7.5% to 7.55%.
This average yield was 22.5 basis points higher than the last award. It was 160 basis points above the 5.925% coupon. The rate exceeded the secondary market quote by 11.4 basis points. Rizal Commercial Banking Corp noted that geopolitical risks stoked volatility. Inflation pressures may lead to tighter financial conditions.
Global rates hit decades high
Benchmark 10-year US Treasury yields rose above 5.021%. This was the highest level since mid-2007. Japan’s 10-year government bond yield climbed to 3.025%. This marked a fresh 30-year high. Markets priced in a 90% chance of a US rate hike.
The Bank of Japan is expected to raise rates by 25 basis points. The move would bring the rate to 1.25%. Houthi attacks on Saudi Arabia raised supply concerns. Riyadh blamed Iran-backed fighters for a pipeline attack. Gulf states postponed planned talks with Iran. These events kept global markets on edge. GN markets/rates (en-US) reported the data. The Federal Open Market Committee began its two-day meeting. The Fed’s first increase since mid-2023 is likely.
