10-year interest rate drops

Published August 16, 2022, 4:51 PM

by Chino S. Leyco

The benchmark interest rate on debt falling due in almost 10-years declined at an auction of the government IOUs at the Bureau of the Treasury on Tuesday, Aug. 16.

The interest rate of the 10-year IOUs, with a remaining life of nine-years and 10 months, fetched 5.813 percent, lower than the original coupon rate of 7.25 percent sold in June.

Moreover, the average rate was below the 5.950 percent fetched in the secondary market, based on the PHP Bloomberg Valuation (BVAL) Service Reference Rates published on the Philippine Dealing System’s website.

Investors were willing to buy as much as P128.831 billion of the reissued 10-year Treasury bonds, more than the government’s offer of P35 billion.

“This is another impressive auction,” National Treasurer Rosalia V. De Leon told reporters.

She explained that the strong demand from investors showed market’s preference for long tenor even with expected rate hikes by the Monetary Board of the Bangkok Sentral ng Pilipinas.

Strong demand and the reasonable rate also prompted the Treasury bureau to open the tap facility to raise another P15 billion via the papers.