Borrowing continues weeks before Duterte gone: P35B more from local bonds
MANILA, Philippines—The Bureau of the Treasury (BTr) on Wednesday (May 4) borrowed P35 billion through reissued three-year bonds, at a higher yield of 4.598 percent.
When these treasury bonds—maturing in April 2025—were first offered last month, it fetched a coupon rate of 4.25 percent. In the secondary market, three-year T-bonds were priced at 4.139-4.381 percent.
Government securities eligible dealers (GSEDs) or domestic creditors bid for these IOUs at a high of 4.85 percent and a low of 4.3 percent.
“Markets are bracing for a hawkish pivot from the US Federal Reserve, with [expectations of] a 50-basis point (bp) rate hike in tandem with balance sheet reduction to battle inflation” hitting 40-year highs in the US, National Treasurer Rosalia de Leon said.
Locally, De Leon pointed to forecasts placing April inflation above the Bangko Sentral ng Pilipinas’ (BSP) 2 to 4 percent target range of manageable price hikes, making the market jittery.
It did not help that Governor Benjamin Diokno had already “issued a warning that [the BSP] may start hiking [interest rates] this June,” De Leon added.
De Leon nonetheless noted that during the previous high inflation episode in 2018, three-year debt paper had a higher average yield of 4.79 percent.
The auction was oversubscribed as GSED tendered a total of P41.5 billion. To date, the BTr raised a cumulative P60.8 billion from this bond series.