MANILA -- Rate of the Philippines’ seven-year Treasury bond (T-bond) rose Tuesday, which Deputy Treasurer Erwin Sta. Ana attributed to inflationary pressures.
Average rate of the debt paper inched up to 4.732 percent from 4.322 percent during the auction of the same tenor on October 29, 2019.
The auction committee accepted PHP27.203 billion worth of bids, lower than the PHP30-billion offer. Total bids amounted to PHP52.71 billion.
“The approach of the auction committee was to award at a rate that is close to where the security is in the secondary market,” Sta. Ana said, citing that rate of the same tenor in the morning session at the secondary market on Tuesday is around 4.7 percent.
He said domestic interest rates have been rising in recent weeks “and basically, these are brought about by inflationary pressures” partly due to the Taal Volcano eruption.
He added risk from the volatility of oil prices also adds to the inflationary pressures.
Rate of price increases has been normalizing since peaking at 6.7 percent in September and October 2018 and decelerating to 0.8 percent in October 2019.
It ended 2019 at 2.5 percent while average rate last year stood at 2.5 percent, within the government’s 2-4 percent target band.
Monetary officials forecast inflation to average this year at 2.9 percent. (PNA)
