PHL 3-year T-bond rate rose Tuesday

MANILA-- The rate of the Philippine government's three-year Treasury bond (T-bond) registered an uptick Tuesday, which National Treasurer Rosalia de Leon traced to investors' decision to price in a hike in the US Federal Reserve rates this month.

The average rate of the three-year bond went up to 3.873 percent from 3.492 percent in the auction last February 7.

De Leon told reporters after the auction that the higher rate is in line with the movements in the secondary market.

"There's already market reaction in terms of rates on the lift-off eventually. Even (US Federal Reserve chair Janet) Yellen herself has spoken that accommodation will really be scaled back, so definitely markets are not only 96 percent but already 100 percent. Definitely it's on the table," she said.

De Leon said a sustained rise of inflation is also a factor in the increase of interest rates.

In the first two months this year, rate of price increases averaged 3 percent, between the government's 2 percent to 4 percent target for this year until 2020.

Last February alone, inflation rose to 3.3 percent from month-ago's 2.7 percent due to faster increase in the food and non-alcoholic beverage index.

The Bureau of the Treasury (BTr) offered the bond for PHP15 billion and the auction committee made a full award after tenders reached PHP35.784 billion.

"We see a very healthy demand. It's just that rates have really gone up," de Leon added.

Source: Philippines News Agency

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