Borrowing continues weeks before Duterte gone: P35B more from local bonds
Bureau of the Treasury (From the Facebook account of the bureau)
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.
