Gov’t endures higher bond yield, borrows P35B more

MANILA, Philippines—The Bureau of the Treasury (BTr) on Tuesday (April 19) raised P35 billion from reissued seven-year bonds despite creditors’ higher bid rates influenced by more aggressive US interest rate hikes.

The BTr fully awarded its offering of IOUs maturing in August 2028, even as the average annual rate rose to 5.779 percent from 5.541 percent during the previous auction.

“Rates were higher with a more hawkish Fed pivot and increasing calls for a half-point hike to tame hot US inflation,” National Treasurer Rosalia de Leon said.

In March, the US Federal Reserve already hiked interest rates by 25 basis points (bps). With inflation in the US hitting 40-year highs, market watchers expect the Fed to next increase rates by a bigger 50 bps.

Tuesday’s treasury bond auction was 1.4 times oversubscribed, as government securities eligible dealers (GSEDs) tendered P47.3 billion.

To date, the BTr raised a cumulative P275.6 billion from this bond series.

The government will borrow a total of P2.2 trillion this year, of which three-fourths or P1.65 trillion would be from the domestic debt market to take advantage of flushing liquidity while tempering foreign exchange risks.

The rest will be external financing amounting to P560.6 billion, which would be borrowed from bilateral and multilateral lenders as well as through offshore bond issuances.

TSB

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