NextGen Day

MANILA – After investors requested a high yield, the Bureau of the Treasury (BTr) partially awarded a new issuance of a seven-year Treasury bond (T-bond) auctioned on Tuesday.

The debt paper’s coupon rate is 6.5 percent, with an average rate of 6.428 percent, significantly higher than the 3.674 percent obtained by a similar tenor previously.

The debt instrument was offered by the BTr for PHP35 billion, and tenders totaled PHP46.941 billion. PHP20.108 billion was granted by the auction committee.

National Treasurer Rosalia de Leon previously linked the rise in interest rates on government assets given to investors during weekly auctions to expectations of more Federal Reserve rate hikes, which have totaled 75 basis points since last March.

Investors are also anticipating a rise in the Bangko Sentral ng Pilipinas’ (BSP) key rates, according to De Leon, given the predicted acceleration of domestic inflation following its jump to 4.9 percent last April, owing in part to increases in global oil and commodity prices.

To now, average inflation has been 3.7 percent, although the figure for last April had exceeded the government’s 2-4 percent goal area.

On Thursday, the BSP’s policy-making Monetary Board (MB) will hold a rate-setting meeting, with a 25-basis-point hike in the central bank’s benchmark rates largely expected.

Following a 200-basis-point drop in 2020, the central bank’s overnight reverse repurchase (RRP) rate is now at a record-low of 2%, as part of the BSP’s attempts to boost lending and ensure economic activity despite the pandemic’s impact.

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