The lingering anticipation over higher borrowing costs in the US caused the Philippines' long-term benchmark interest rate to increase.
At the Bureau of the Treasury auction on Tuesday, March 29, yield on 10-year debt papers rose to 6.092 percent from 4.875 percent when the same IOUs were auctioned off last January.
Interest rate was also higher than the 5.6454 percent quoted for the 10-year tenor at the secondary market.
Investors were willing to buy as much as P57.915 billion of the debt papers, which have a remaining life of nine-years and eight-months. This is more than the government's offer of P35 billion.
The bureau made a full award on Tuesday.
“Markets remain defensive following increasing US Treasury rates with more aggressive tone from US Federal Reserve,” National Treasurer Rosalia V. De Leon told reporters after the auction.
Aside from the US Fed, de Leon cited that the Bangko Sentral ng Pilipinas (BSP) higher inflation forecast also affected market sentiment.
The BSP earlier raised the inflation forecast for this year to 4.3 percent from 3.7 percent made during the February 2022 meeting. The forecast for 2023 was also raised to 3.6 percent from 3.3 percent.
On Monday, the Treasury made a partial award of short-term IOUs as investors continued to press for an increase in interest rates.
The government awarded P5 billion in 91-day Treasury bills, while rejected bids for the 182-day and 364-day debt papers.
“I hope the market will become reasonable especially with bids for T-bills,” de Leon said.