National Treasurer Rosalia de Leon
MANILA – The rate of the 10-year treasury bond (T-bond) rose Tuesday, which National Treasurer Rosalia de Leon attributed to expectations of higher inflation rate for January 2021.
The average interest rate of the debt paper with a remaining term of nine years and five months increased to 3.066 percent from 2.719 percent during the auction of the same tenor last January.
In a Viber message to journalists, de Leon traced this development to “inflation reading for January and expectation this year.”
The Bangko Sentral ng Pilipinas (BSP) projects the rate of price increases in the first month this year to range between 3.3 to 4.1 percent, or a point inflation rate of 3.7 percent.
Its average inflation projection for January 2021 is higher than the 3.5 percent last December which, in turn, is the third consecutive month of acceleration due to the impact of weather disturbances on the price of select agricultural products.
The Philippine Statistics Authority (PSA) is scheduled to report the January 2021 inflation rate on Friday.
The Bureau of the Treasury’s (BTr) auction committee made a full award of PHP30 billion while tenders for the 10-year T-bond were more than double at PHP63.045 billion.
Amid the interest rate rise, de Leon said it is “good to see strong participation in the long end at relatively low pick up in yields.”
Asked whether she expects rate upticks in the near term given the expectations of higher inflation rate in the coming months, de Leon said she anticipates “some upward adjustments in the long end.”
“But (the) front end will remain, with abundant liquidity and heavy bias on this segment,” she added. (PNA)
