The rate of the Philippines’ re-issued three-year Treasury bond (T-bond) rose Wednesday as demand remains high due in part to expectations of further rise in interest rates in general.
Average rate of the debt paper which has a remaining life of two years and five months increased by 43.30 basis points to 5.136 percent from the 4.703 percent it fetched previously.
Investors submitted a total of P26.287 billion worth of bids and the auction committee made a full award of P15 billion.
National Treasurer Rosalia de Leon said the uptick in rates remain within expectations.
“It’s aligned with the market. And (since it’s) three years we see that there’s continued appetite in the market because it’s shorter than (the) front end of the curve. Also, that’s a sweet spot for investors so we decided to do a full award today,” she said.
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De Leon said they accepted the bids even after investors asked for higher yield because domestic interest rates are rising on account of the 100 basis points increase in the Bangko Sentral ng Pilipinas’ (BSP) key rates to date.
Had the auction committee thumbed down the increase in the three-year T-bond’s rate it will really be behind the curve, she said.
“They provided for additional buffer in case market would also move,” she said, citing also market participants’ expectations for inflation to peak this year by September.
“So unlike in the (Treasury) bills, it’s short. Here, you still have the duration of three years. They would still be provided that cushion to be able to avoid M-to-M (mark-to-market) losses also,” she added.
