MANILA – The rate of seven-year Treasury bond (T-bond) rose on Tuesday partly on expectations for further hikes in the Federal Reserve’s key rates, resulting in the partial award for the debt paper.
The average rate of the paper increased to 5.601 percent from 4.689 percent previously.
The BTr offered the T-bond for PHP35 billion and tenders reached PHP40.599 billion. The auction committee accepted PHP15.699 billion.
“Market remains defensive with (Federal Reserve Chairman Jerome) Powell turning aggressive as he indicated 50 bps (basis points) rate hikes in next FOMC (Federal Open Market Committee) meetings is on the table,” National Treasurer Rosalia de Leon told journalists in a Viber message.
The FOMC, after its March 15-16 meeting, hiked the Fed’s key rates by 25 basis points, the first since December 2018.
This brought the Fed’s key rates to between 0.25 to 0.50 percent, a move aimed to help address the rising consumer price index (CPI) in the US, which jumped by 7.9 percent on an annual basis last February, a four-decade high level.
Meanwhile, the Philippines’ multi-tranche US dollar-denominated bond offer was a success after it priced a total of USD2.25 billion-worth of five-year, 10.5-year, and 25-year global bonds.
The coupon of the five-year paper stood at 3.229 percent, the 10.5-year at 3.556 percent; and the 25-year at 4.200 percent.
The longest tenor among the offering is part of the country’s Sustainable Finance Framework, and is the initial foray into the environmental, social and governance (ESG) global bonds offering.
Settlement date is expected this March 29, the BTr said.
De Leon said they offered US dollar-denominated debt papers instead of euro-denominated debt instruments at the start of the year unlike in recent years, as volatility is up due in part to the Ukraine-Russia conflict.
“(We) scanned (the) market landscape and (US) dollar(denominated bonds are) still least costly,” she said. (PNA)
