Yields on 6-year Treasury bonds up to 2.997%/year

Yields on six-year Treasury bonds rose marginally on Tuesday as investors sought higher returns after rates fell to record lows.

The rate for the six-year bonds rose to 2.997 percent in Tuesday’s auction, up by 4.4 basis points from the previous rate registered in June.

The Bureau of the Treasury’s auction committee accepted P30 billion worth of bids, thus raising in full the amount stated in the borrowing program.

The bonds were oversubscribed, with tenders reaching a total of P42.78 billion.

“The latest rate is in line with secondary market rates,” National Treasurer Rosalia de Leon said, explaining the decision behind the acceptance of bids and consequently allowing the minimal increase in the rates.

The T-bond auction on Tuesday was the second to the last government securities auction for the year.

The last one will be held on Dec. 3, when the government is scheduled to raise P30 billion to complete the government’s borrowing requirement for the year.

Meantime, De Leon said the government was finalizing a reconstruction plan for areas affected by Supertyphoon “Yolanda.”

Details of the reconstruction plan, particularly the cost, will determine whether the government will adjust its 2014 borrowing program.

Under the original fiscal plan for next year, the government is supposed to borrow $2.2 billion from foreign creditors, of which $1 billion will be through sale of sovereign bonds in the international capital market.

The rest will be in the form of official development assistance from foreign development institutions led by the World Bank, Asian Development Bank and Japan International Cooperation Agency.

De Leon said the borrowing plan would take into account the cost of reconstruction.

Echoing statements from other economic officials, De Leon said the funds for reconstruction would come from the government and ODAs from foreign developmental lenders.

“We will have to take advantage of the available cheap loans,” she said.

The Asian Development Bank and the World Bank each committed $500 million to help fund reconstruction initiatives for calamity-stricken areas.

The hardest-hit regions are Eastern, Western and Central Visayas, which together account for 12.5 percent of the country’s gross domestic product and 20 percent of its population.

The calamity is expected to drag growth of the Philippine economy this year to a range of 6.5 and 7 percent compared with the previous projection of 7.3 percent.