FULL AWARD. Bureau of the Treasury (BTr) awards the PHP10-billion, 10-year Treasury bond (T-bond) in full on Tuesday amid the hike in the debt paper's rate. National Treasurer Rosalia de Leon traced the rate uptick to similar decisions of the Bangko Sentral ng Pilipinas and the Federal Reserve. (Photo from BTr)
MDM08-0524
BTr fully awards 10-yr T-bond despite rate uptick
MANILA – The Bureau of the Treasury (BTr) fully awarded the re-issued 10-year Treasury bond (T-bond) on Tuesday amid the uptick in its interest rate.
It offered the paper for PHP35 billion as total tenders reached PHP72.9 billion.
Average rate of the debt securities rose to 6.894 percent from 6.313 percent previously.
“Higher rates demanded by market for duration premium following BSP (Bangko Sentral ng Pilipinas) rate hike and expectations for similar follow up actions both from Fed (Federal Reserve) and BSP to tame inflation,” National Treasurer Rosalia de Leon told journalists in a Viber message.
Last week, the BSP’s policy-making Monetary Board (MB) hiked by 25 basis points the central bank’s key rates after noting the continued recovery of the economy and the expectations for further acceleration of the domestic rate of price increases.
After a 200-basis-point reduction in the BSP’s key rates in 2020, which is part of the central bank’s pandemic-related measures, the central bank’s overnight reverse repurchase (RRP) rate is now at 2.25 percent from a record-low of 2 percent, the first hike since 2018.
Relatively, the Fed’s key rates are now between 0.75 and 1 percent following the 25-basis-point increase last March, which is the first since December 2018, and the 50-basis-point hike in the following month, both of which are targeted to help tame the accelerating inflation rate in the US.
Asked if it is still a good time to keep the May 2022 borrowing program, the PHP35 billion weekly borrowing for T-bond, and the PHP15 billion for Treasury bills (T-bills), for June, De Leon said they are “still finalizing (the) program.”
“Hard to say what is good since market and us may have different objectives. But auction showed there is appetite for long tenors with good bid to cover but pay for the maturity extension/compensate for duration risk,” she added. (PNA)
