THE GOVERNMENT made a full award of the Treasury bonds (T-bonds) it offered on Tuesday at a lower average rate on the back of strong demand for longer tenors amid better yields.

The Bureau of the Treasury (BTr) raised P15 billion as planned via the reissued 10-year bonds it auctioned off on Tuesday as total bids reached P43.277 billion, or almost three times the amount on offer.

This brought the total outstanding volume for the series to P251.85 billion, the Treasury said in a statement.

The bonds, which have a remaining life of nine years and two months, were awarded at an average rate of 5.87%. Accepted yields ranged from 5.828% to 5.89%.

The average rate of the reissued papers was 9.7 basis points (bps) lower than the 5.967% fetched for the bonds when they were last awarded on Sept. 17. This was also 38 bps below the 6.25% coupon rate for the issue.

This was also just 2 bps higher than the 5.85% fetched for the 10-year bond and 0.7 bp below the 5.863% quoted for the same bond series at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The government fully awarded its offer of reissued 10-year bonds as the average rate fetched was lower than the issue’s coupon and the yield quoted for the last issuance, the BTr said.

“It was awarded within the market’s expected range. You can see that there is appetite for duration as yields become attractive,” a trader said in a text message.

The T-bond offer was met with strong demand after the Bangko Sentral ng Pilipinas’ (BSP) latest cut in banks’ reserve requirement ratios (RRR) took effect on Friday, as this released about P400 billion in liquidity into the financial system, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The BSP has reduced the RRR for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% from 9.5% effective Oct. 25.

It also cut the RRR for digital banks by 200 bps to 4%, while the ratio for thrift lenders was brought down by 100 bps to 1%. Rural and cooperative banks’ reserve requirement was slashed by 100 bps to 0%.

The yields fetched were aligned with secondary market levels amid market caution before the US presidential election on Nov. 5, Mr. Ricafort added.

The election for US president is expected to be close. Vice-President Kamala Harris, a Democrat, was leading Republican Donald Trump nationally by a marginal 46% to 43%, a recent Reuters/Ipsos poll showed, Reuters reported. Election Day in the US is Nov. 5.

Ten-year US Treasury yields eased to 4.2661% on Tuesday, after reaching the highest since July 11 at 4.3% overnight.

The US currency has also been buoyed by rising market expectations for an election win for Mr. Trump, whose tariff, tax and immigration policies are seen as inflationary, thus negative for bonds and positive for the dollar.

Tuesday’s T-bond auction was the government’s last offering for the month. It raised the planned P45 billion via the long-term papers as it made full awards of all its offerings.

With this, the BTr was able to raise P145 billion as programmed from the domestic market in October.

For November, the government is looking to borrow P90 billion from the domestic market, or P60 billion via Treasury bills (T-bills) and P30 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.48 trillion or 5.6% of gross domestic product this year. — A.M.C. Sy with Reuters