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7-year T-bond rate rises

By Joann Villanueva

July 12, 2022, 4:32 pm

<p><strong>REASONABLE RETURNS.</strong> The average rate of seven-year Treasury bond (T-bond) jumps on Tuesday (July 12, 2022) in line with the increases in domestic interest rates. National Treasurer Rosalia de Leon said they need to award the debt paper amidst the rate uptick to give investors “reasonable returns" for their funds.</p>

REASONABLE RETURNS. The average rate of seven-year Treasury bond (T-bond) jumps on Tuesday (July 12, 2022) in line with the increases in domestic interest rates. National Treasurer Rosalia de Leon said they need to award the debt paper amidst the rate uptick to give investors “reasonable returns" for their funds.

MANILA – The rate of re-issued seven-year Treasury bond (T-bond) rose on Tuesday but demand for the debt paper remained strong thus, it was fully awarded. 
 
The average rate of the debt paper increased to 6.760 percent from 6.740 percent previously. 
 
The Bureau of the Treasury (BTr) offered the securities for PHP35 billion. Total bids were nearly three times at PHP91.961 billion. 
 
Given the current situation wherein central banks continue to hike their key rates to help address rising inflation rate, among others, National Treasurer Rosalia de Leon said the auction committee needs to accept demands for higher yields in the government securities.
 
“Not okay but given (the) current market environment, (we) need to provide reasonable return to investors for risks they are taking,” she said. 
 
De Leon has reiterated in the past that demand for high yield was caused by investors’ protecting their funds vis-à-vis the expected key rate increases both here and abroad. 
 
For one, the Bangko Sentral ng Pilipinas (BSP) has increased its key rates by a total of 50 basis points at 25 basis points each last May and June. 
 
BSP Governor Felipe Medalla has expressed openness to announce aggressive rate hikes by August if need arises. 
 
Also, the Federal Reserve’s key rates have been hiked by 150 basis points since last March and these are expected to rise further to help tame US’ four-decade high inflation rate and threats of possible recession. (PNA)
 

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