YIELD of the four-year Treasury bonds plunged during the auction on Tuesday following good investor sentiment on the budget surplus achieved by the government in April.

The debt paper fetched an average rate of 5.213 percent, some 84.3 basis points lower than the 6.058 percent achieved when the government last issued the tenor on March 19, 2009.

“There was a confluence of positive news,” National Treasurer Roberto Tan said after the auction.

Tenders reached P35.67 billion, or about four times oversubscribed, allowing the government to make a full award of P9 billion.

The rate was also below the secondary-market rate for the same tenor of 5.375 percent.

During the week, the government only expects maturing debts of P1.4 billion, most of which were 91-day Treasury bills.

On Monday the Bureau of the Treasury said the government achieved a P26.26-billion budget surplus in April after expenditures of many government agencies were slower compared with last year’s.

Budget Secretary Florencio Abad said that the government disbursements in April amounted to P112.1 billion, or 8 percent lower than the P121.9 billion spent last year and 14 percent lower than the program of P130.1 billion.

Disbursements for the first four months of the year amounted to P461.4 billion, lower by P60.5 billion or 11.6 percent compared to P521.9 billion last year.

Tan said, however, that even with the good fiscal deficit figure, the government is sticking with its borrowing plan for the year, including raising some $750 million from the overseas debt market during the remaining months of the year.

“Right now we’re maintaining the [borrowing] program. But we have no plans right now [to raise the funds overseas] and to change the government’s budget deficit target ceiling,” Tan said.

Under the program for 2011, the government will borrow some P754.6 billion to fund social services and infrastructure project-related expenditures.

Of the amount to be borrowed this year, 73 percent, or about P563.33 billion, will be sourced from the domestic market, such as the sale of government  securities, while the remaining 27 percent, or P191.3 billion, will come from  foreign sources through the flotation of sovereign bonds.

The government budget deficit ceiling was placed at P300 billion.