The interest on the three-year Treasury bond went up by 74.4 basis points (bps), to average 4.994 percent, compared to the coupon rate of 4.25 percent when the debt paper was first issued on April 7.
Also, the resulting average at Tuesday’s auction was 39.6 basis points higher than the average of 4.598 percent set in the previous auction held last May 4.
On Tuesday, investors tendered a total of P56.93 billion, which is not even double the P35-billion offer.
With a partial award at the auction, the government raised only P9.3 billion.
National Treasurer Rosalia de Leon told reporters the auction results showed the defensiveness of investors against expectations that inflation will heat up beyond 5 percent.
De Leon said investors were also wary of additional increases in policy rates this month, both at the Bangko Sentral ng Pilipinas and United States Federal Reserve whose rates influence economies like the Philippines.
Also on Tuesday, BSP Governor Benjamin Diokno said monetary authorities expect inflation in May to ratchet up to within the range of 5 to 5.8 percent.
This would mean a second month in a row for inflation rising above the government’s target band of 2 to 4 percent for the 2022 average. In April, inflation was recorded at 4.9 percent year-on-year.
“The continued increase in domestic petroleum prices, higher prices of key food items, and peso depreciation are the primary sources of inflationary pressures during the month,” Diokno said in a statement.
“These could be offset in part by lower electricity rates in Meralco-serviced areas, decline in LPG prices, and lower rice prices,” he added.