7-year T-bonds fetch coupon rate of 8.375%
The government’s seven-year Treasury bonds (T-bonds) fetched a coupon rate of 8.375 percent yesterday, 187.5 basis points higher compared to the rate of a similar debt paper issued in November of 6.5 percent.
Finance Undersecretary and Acting National Treasurer Roberto Tan said the rate was very much aligned with the rates in the secondary market of 8.5 to 8.6 percent.
During yesterday’s auction, the government accepted P7 billion worth of bids as total tenders reached P11.32 billion.
Tan attributed the rise in rates to rising inflation in the country.
Inflation or the rise in consumer prices has been going up due to skyrocketing oil and food prices.
The National Statistics Office (NSO) reported that the country’s inflation rate rose 8.3 percent in April, the highest level since 2005.
The latest figure is also well above expectations of seven percent and up from the previous month’s inflation rate of 6.4 percent due mainly to rising food prices
Within the food component, the price of rice, a staple in the
Inflation for food rose to 11.4 percent in April from 8.2 percent in March; clothing, 3.9 percent from 3.6 percent; housing and repairs, 3.8 percent from 3.1 percent; fuel, light and water, eight percent from 6.2 percent; services, 6.9 percent from 6.4 percent; and miscellaneous items, 2.6 percent from 2.4 percent.
Oil prices, meanwhile, have been increasing every week for the past four weeks by at P0.50 to P1 per liter.
The Bangko Sentral ng Pilipinas’ average inflation target for the year is three percent to five percent but BSP Governor Amando M. Tetangco Jr. said inflation is likely to persist until September.
“The market has factored in the central bank’s forecast that inflation will persist until September,” Tan told reporters after yesterday’s auction.
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