NextGen Day

MANILA, Philippines — On Tuesday, the rate on a seven-year Treasury bond (T-bond) increased, owing to forecasts of more hikes in the Federal Reserve’s key rates, resulting in a partial award for the debt paper.

The paper’s average rate rose to 5.601 percent from 4.689 percent previously.

The T-bond was auctioned by the BTr for PHP35 billion, with tenders totaling PHP40.599 billion. PHP15.699 billion was accepted by the auction committee.

In a Viber message to journalists, National Treasurer Rosalia de Leon said, “Market remains defensive with (Federal Reserve Chairman Jerome) Powell turning aggressive as he stated 50 bps (basis points) rate rises in the upcoming FOMC (Federal Open Market Committee) sessions is on the table.”

Following its March 15-16 meeting, the FOMC raised key interest rates by 25 basis points, the first increase since December 2018.

The Fed’s key rates were raised to 0.25 to 0.50 percent as a result of this action, which was intended to help address the rising consumer price index (CPI) in the United States, which surged 7.9% on an annual basis in February, a four-decade high.

Meanwhile, the Philippines’ multi-tranche US dollar-denominated bond offering was a success, with five-year, 10.5-year, and 25-year global notes priced for a total of USD2.25 billion.

The five-year paper had a discount of 3.229 percent, the 10.5-year had a coupon of 3.556 percent, and the 25-year had a coupon of 4.200 percent.

The offering’s longest tenor is part of the country’s Sustainable Finance Framework, and it’s the country’s first entry into global environmental, social, and governance (ESG) bonds.

According to the BTr, the settlement date is set for March 29.

De Leon noted that, unlike in previous years, they sold US dollar-denominated debt papers instead of euro-denominated debt instruments at the start of the year, as volatility is high owing to the Ukraine-Russia conflict.

“We assessed the market environment and (US) dollar-denominated bonds continue to be the least expensive,” she said.

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