NextGen Day

Tuesday saw a rise in the rate for five-year Treasury bonds (T-bonds), but the auction committee only awarded some of the debt paper.

The average rate of the securities increased slightly from 5.772 percent to 7.131 percent.

The T-bond was auctioned by the Bureau of the Treasury (BTr) for PHP35 billion, and bids totaled PHP41.6 billion. PHP30.64 billion was given away by the auction committee.

In a Viber message to reporters, National Treasurer Rosalia de Leon said: “Average rate is still within secondary level with modest premium to account for illiquidity premium and expectation for point by point match rate hike by BSP (Bangko Sentral ng Pilipinas) with that of Fed (Federal Reserve), noting (that) inflation has yet to peak with added pressure from supply constraints due to past typhoon damages.”

The Fed raised its benchmark interest rates by 75 basis points last week after observing the persistently high inflation rate in the largest economy in the world.

To lower US inflation to the Fed’s goal rate of 2 percent, the Federal Reserve funds rates are expected to continue rising.

In order to maintain a sufficient interest rate divergence with the US, BSP Governor Felipe Medalla stated they will also raise the BSP’s key rates by the same amount during the rate-setting meeting of the policy-making Monetary Board (MB) on Nov. 17.

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