Strong demand at the auction Tuesday set a lower interest rate on the treasury bond due 2031 compared to the level at the secondary market.
Total bids reached P114.9 billion, nearly four times the offered amount of P30 billion, allowing the Bureau of the Treasury to award the full offer and open a tap facility that allows the government to raise an additional P10 billion. The tap facility allows the government to take advantage of strong market demand to secure extra borrowing at the same rate approved during the auction.
Average rate was set at 6.286 percent, lower compared to the prevailing rate of 6.378 percent for the seven-year debt paper in the secondary debt market
The bond auctioned Tuesday was originally issued in 2011 as a 20-year bond with coupon of 8.00 percent.
With the results of the auction and the opening of the tap window, the full program for the 2031 bond increased to P353.3 billion.
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