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Peso GS Weekly: Getting ready for the upcoming auctions
It is wise to take profit now and accumulate longer-dated bonds in the next auctions of the Bureau of the Treasury.
By Geraldine Wambangco and the Metrobank Local Currency Trading Department
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WHAT HAPPENED LAST WEEK
The peso government securities (GS) market started the week on its back-foot, with selling interest mostly seen against the backdrop of rising global bond yields, and with most players keen to trim positions in the 5- to 10-year space ahead of the 20-year bond auction.
The Dutch auction (coupon-setting) of the new issuance 20-year Fixed Rate Treasury Note (FXTN) 20-27 was partially awarded at a high of 6.950%, with the coupon for the bond set at 6.875%. Total awarded bids for the auction reached only PHP 22.717 billion, with a bid-to-cover of 1.263x. The auction failed to bring any reprieve in the local space as players turned into better sellers, again tracking the gradual move higher in global yields.
The latter half of the week was uneventful given the absence of