INVESTMENT-HUNGRY bond investors offered to buy from government nearly four times more long-dated IOUs than the Bureau of Treasury (BTr) was willing to sell on Tuesday, its sale of seven-year bonds having been swamped with buy offers reaching P32.727 billion.

Treasury chief Roberto Tan was prepared to sell no more than P9 billion worth of Treasury bonds which he expected to cost the government no more than 5 percent a year to service over that seven-year stretch.

But the highly liquid market, in addition to the relative lack of investment havens that bond investors seek out of habit, sought to secure for themselves the allocation they need from the Treasury by offering to buy the bonds at a rate of only 4.504 percent.

This was an offer Tan could hardly afford to ignore and sold all P9 billion worth of seven-year bonds 30.4 basis points lower than the same bonds cost the National Government six weeks earlier when it last sold seven-year IOUs.

The sale is testament to the highly liquid state of most financial institutions whose investment portfolios often end up at the special deposit account or SDA window of the Bangko Sentral ng Pilipinas (BSP).

Some P1.7 trillion worth of funds have been brought to the SDA window as of latest reports from the BSP, funds that could in theory feed the hundreds of billions of pesos worth of infrastructure-related projects the government has started to pursue with greater vigor and urgency than it did last year.

These are funds that should otherwise be deployed for more productive undertakings such as the export activities of thousands of the country’s small and medium-scale entrepreneurs or the funding requirements of the manufacturing sector whose product and services are patronized by China, for instance, or the United States, even.

Because the demand was so insistent, Tan was compelled to release some of that pent-up pressure by offering a tap facility of an equal amount that will allow bond investors to fill up the investment requirement of their clients.

“We will open up a tap facility,” Tan told reporters soon after the bidding was closed.

Two weeks earlier, Tan also had to open the tap facility in the wake of demand generated by the sale of 20-year bonds which sold P9 billion.

At that time, bond investors were willing to buy as much as P40 billion worth of long-dated IOUs or more than four times what the government was prepared to sell.

The IOUs form part of the larger government program to sell P117 billion worth of Treasury bills and Treasury bonds during the quarter ending March 31 this year.

This was on top of a set of so-called retail Treasury bonds or RTBs worth P40 billion that Tan also plans to sell beginning Feb. 21.