MANILA – The rate of 10-year Treasury bond (T-bond) rose on Tuesday due to lingering concerns on domestic inflation rate and the possible hikes in the Bangko Sentral ng Pilipinas’ (BSP) key policy rates.
The average rate of the debt paper increased to 5.130 percent from 4.689 percent previously.
The Bureau of the Treasury (BTr) offered the debt for PHP35 billion and the auction committee made a full award. Total tenders reached PHP55.369 billion.
National Treasurer Rosalia de Leon said the elevated inflation rate and a possible hike in the central bank’s key rates continue to be among investors’ concerns.
De Leon said “while inflation has decelerated, (the) market (is) still concerned (because) inflation (is) higher than target.”
“And with strong third-quarter GDP (gross domestic product) performance (investors are) speculating that BSP may start raising rates,” she added.
The Philippine Statistics Authority (PSA) reported on Tuesday the 7.1-percent expansion of the domestic economy, as measured by GDP, in the third quarter this year, which is higher than market expectations.
This is the second consecutive quarter of expansion for the domestic economy after five consecutive contractions since the first quarter of 2020 due to the pandemic.
On the other hand, the rate of price increases remains above the government’s 2 percent to 4-percent target band although it continues to decelerate.
Inflation last October slowed to 4.6 percent from the previous month’s 4.8 percent.
Average inflation in the first 10 months this year stood at 4.5 percent.
Monetary authorities project inflation to slow down to within the target band by the end of this year.
Meanwhile, de Leon said they are still studying the possible tenor and launch date of the planned retail treasury bond (RTB) issuance.
“But lower inflation print in October and better-than-expected Q3 GDP augur well for another RTB offering,” she added. (PNA)
