PH gov’t bonds track US Treasuries higher

National Treasurer Rosalia de Leon / INQUIRER FILE PHOTO

The yield on the 10-year treasury bond went up further on Wednesday, rising up by 21.8 basis points (bps) to average 5.093 percent compared to the coupon rate.

Also, the average was 1.8 basis points higher than the corresponding 5.075 percent prevailing at the secondary market.

The latest rate for the 10-year T-bond—originally issued last Jan. 20 at a coupon of 4.875 percent—was also higher by 26.2 bps compared to results from the previous auction when interest averaged at 4.831 percent.

Oversubscribed

On Tuesday, investors tendered a total of P51.077 billion or about half more than the offer. The government raised P35 billion as planned.

National Treasurer Rosalia de Leon told reporters the resulting average rate was within the range at the secondary market although it tracked higher than corresponding rates for US Treasury securities.

“The average rate was marginally higher than secondary level as local rates track the climb in US treasuries,” De Leon said.

“The market remains defensive with an anticipated higher increase in the January inflation rate in the US, adding more pressure for the US Federal Reserve to act hawkishly.”

US, PH moves

In their latest commentary on the market issued last week—before Tuesday’s auction—First Metro Investment Corp. and the University of Asia and the Pacific (UA&P) said that despite the US Fed’s recent pronouncements of more aggressive policy rate hikes for 2022, the local 10-year bond yields eased by 19 bps to end 2021 at 4.82 percent.

Philippines government securities did well in December, with yields falling as the domestic economy showed renewed signs of vitality, while US Treasuries ended higher due to inflation concerns, First Metro and UA&P said.

They noted that despite a spike in the US 10-year T-bond yields by 38 bps from end-2021 to peak at 1.893 percent on Jan. 19, Philippine 10-year T-bond yields moved only sideways, referring to a stable range.

“Unless we see a more aggressive Fed rate hike trajectory, the local 10-year yields should move sideways in the first semester of 2022,” they added. Philippines government securities’ “performance will likely depend on the robustness of the Philippine economic recovery.” INQ