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BTr fully awards 10-year T-bonds despite rising interest rates.

MANILA – The re-issued 10-year Treasury bond (T-bond) was fully awarded by the Bureau of the Treasury (BTr) on Tuesday, despite an increase in its interest rate.

The paper was offered for PHP35 billion, with a total tender value of PHP72.9 billion.

The debt securities’ average rate increased to 6.894 percent from 6.313 percent previously.

“Higher rates required by market for duration premium following BSP (Bangko Sentral ng Pilipinas) rate hike and anticipation for similar follow up actions both from Fed and BSP to contain inflation,” National Treasurer Rosalia de Leon said in a Viber message to journalists.

The BSP’s policy-making Monetary Board (MB) raised the central bank’s benchmark rates by 25 basis points last week, citing the economy’s sustained recovery and prospects for further acceleration of the domestic rate of price increases.

Following a 200-basis-point cut in the BSP’s key rates in 2020 as part of the central bank’s pandemic-related actions, the overnight reverse repurchase (RRP) rate is presently at 2.25 percent, up from a record low of 2%, the first increase since 2018.

Following a 25-basis-point boost in March, the first since December 2018, and a 50-basis-point hike the following month, the Fed’s benchmark rates are currently between 0.75 and 1 percent. Both hikes are intended to help slow the country’s growing inflation rate.

When asked if the May 2022 borrowing program, which includes PHP35 billion in weekly T-bond borrowing and PHP15 billion in Treasury bills (T-bills), is still viable for June, De Leon stated they are “still finalizing (the) program.”

“It’s difficult to determine what’s good because the market and ourselves may have different goals. “However, the auction demonstrated that there is desire for long tenors, with a strong bid to cover but pay for the maturity extension/compensate for duration risk,” she noted.

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