7-year T-bonds up to 8.495%

The average rate of the government’s seven-year Treasury bond (T-bond) rose to 8.495 percent in an auction yesterday from an average rate of 6.568 percent of a similar debt paper issued in March.

Finance Undersecretary and Acting National Treasurer Roberto Tan said the rate was very much aligned with the rates in the secondary market of between eight percent and 8.75 percent.

During yesterday’s auction, the government accepted P7 billion worth of bids as total tenders reached P15.7 billion.

Tan attributed the rise in rates to rising inflation in the country.

“Inflation was the overriding influence over the increase in the rates,” Tan said.

Inflation or the rise in consumer prices has been going up due to skyrocketing oil and food prices.

The National Statistics Office (NSO) reported yesterday that Philippine inflation rose 8.3 percent year-on-year in April, the highest level since 2005.

The latest figure is also well above expectations of seven percent and up from the previous monthís inflation rate of 6.4 percent due mainly to rising food prices

Within the food component, the price of rice, a staple in the Philippines, soared in April by nearly 25 percent from a year ago, government data showed.

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, 8.0 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 risen by a total of P5.50 per liter over the past six weeks.

The Bangko Sentral ng Pilipinasí average inflation forecast for the year is 5.5 percent to 6.5 percent.

Monetary authorities are set to meet on Thursday for the monthly policy rate-setting meeting of the central bank.

At present, the central bankís overnight borrowing rate is at five percent while the overnight lending rate is at seven percent.