The benchmark interest rate on debt falling due in almost 12 years rose at an auction of the government IOUs at the Bureau of the Treasury on Tuesday, Nov. 15.
The interest rate of the 25-year IOUs, with a remaining life of 11 years and nine months, fetched 8.168 percent, lower than the original coupon rate of 9.250 percent sold in November 2009.
However, it was higher than the prevailing secondary market rates of 7.741 percent to 7.734 percent.
The Treasury made a full-award, as investors were willing to lend as much as P80.953 billion of the reissued 25-year Treasury bonds, more than the government's offer of P35 billion.
“The average rate, while higher than secondary market rates, already provides for the policy rate hike to be delivered by the Monetary Board,” National Treasurer Rosalia V. De Leon told reporters after the auction.
The Treasury also opened its tap facility window for the 11 government securities eligible dealers (GSEDs)-market makers to raise another P15 billion.
Central Bank Governor Felipe M. Medalla said last Friday, Nov. 11, that he will vote to raise the central bank’s key policy rates by 75 basis points (bps) on Thursday, Nov. 17.
“Since they hiked by another 75 bps, you can expect that I will be voting to raise the policy rate by a similar magnitude,” Medalla said in a recorded message at the Economic Journalists Association of the Philippines awards.