Benchmark yields rise on high inflation

Published May 10, 2022, 2:52 PM

by Chino S. Leyco

Benchmark interest rates rose across the board at Monday’s auction of short-term government debt papers on the back of higher consumer prices.

The yield on the 91-day Treasury bill, which banks use in pricing their loans, moved up to 1.531 percent from 1.272 percent a week ago.

The government accepted P5 billion worth of bids for the three-month IOUs, even as investors were willing to buy as much as P9.009 billion of the debt papers.

The 182-day T-bill rate also rose to 2.165 percent from 1.500 percent in the previous week, but it also prompted the Treasury bureau to reject the offers.

The government was supposed to borrow P5 billion from the sale of the six-month debt papers, even and investors were willing to lend as much as P6.4 billion.

Likewise, the bureau rejected tenders for the one-year IOU on attempts by investors to push the rate to 2.329 percent from 1.933 percent last week. The government was supposed to sell P5 billion of the 364-day T-bills.

“Surge in April inflation continues to dampen market sentiment as analysts see inflation as big headache for next administration,” National Treasurer Rosalia V. De Leon told reporters after the auction.

Last week, the the Philippine Statistics Authority (PSA) reported the country’s headline Inflation clocked in at 4.9 percent in April, faster than the 4.0 percent recorded in March and 4.1 percent in the same month in 2021, data from the PSA showed.

The latest Inflation reading was the highest since the 5.2 percent in December 2018.

But despite the uptick, inflation rate in the first four-months remained within the government’s target band of 2.0 percent to 4.0 percent, at 3.7 percent.