PHL 5-yr T-bond rate up

MANILA-- The average rate of the Philippines' five-year Treasury bond (T-bond) registered an uptick Tuesday in line with what is happening overseas.

It rose to 4.030 percent from 3.876 percent, which Deputy Treasurer Erwin Sta. Ana claimed is "within benchmarks".

"It is not really higher than at the secondary market levels. We think that it is just about aligning with the current levels," he told reporters after the auction.

The rate of the same tenor in the secondary market during the afternoon session Tuesday stood at 4.280 percent.

The Bureau of the Treasury made a full award for the securities at PHP15 billion after tenders were more than double at PHP38.994 billion.

"It's a very healthy turn out for the auction," Sta. Ana said.

The treasury official said the huge turn-out of bids "matches the demand from the market".

"To some extent, it is expected since the demand from the market is on the shorter end of the curve," he said.

Sta. Ana attributed the demand for short-term securities and the increase in rates to uncertainties overseas.

"Everyone is expecting that rates would be on a higher trajectory, given all this volatility externally, so the preference really of the market at this point is essentially on the short and belly of the curve," he said.

Among the factors causing market volatility are rate hike expectations from the Federal Reserve, the impact of the policies of the Trump administration, as well as political developments in Europe, including Brexit.

"Domestically, we don't see any major cause of uncertainty but since we also keep track of what's happening externally as it affects the domestic rates, then we could say that we have to be very vigilant about watching what's happening outside," Sta. Ana added. (PNA)

Source: Philippines News Agency

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