Long-term benchmark interest rate rises

Published January 11, 2022, 2:37 PM

by Chino S. Leyco

The benchmark interest rate on debt falling due in four years and two months rose at Tuesday’s auction of the government IOUs at the Bureau of the Treasury.

Investors were willing to buy as much as P58.277 billion of the reissued five-year Treasury bonds, more than the government’s offer of P35 billion.

However, the rate of the IOUs rose to 4.050 percent from 3.762 percent during the Nov. 2, 2021 auction. For this reason, the bureau made just a partial award P22.126 billion of its offer.

National Treasurer Rosalia V. De Leon said that the highest submitted rate during the auction reached at 4.15 percent, way above the fair value for the security.

De Leon said bids were unreasonable as inflation will trend downward and the Bangko Sentral ng Pilipinas remains patiently supportive for the country’s economic revival from the pandemic induced crisis.