Long-term benchmark yield drops

The benchmark interest rate on debt falling due in almost five years drop at an auction of the government IOUs at the Bureau of the Treasury on Tuesday, Nov. 29.

The interest rate of the 20-year IOUs, with a remaining life of four-years and nine-months, fetched 6.568 percent, lower than the original coupon rate of 8.625 percent sold in September 2007.

The rate was also within the prevailing secondary market rates of 6.631 percent to 6.549 percent.

The Treasury made a partial-award even as investors were willing to lend as much as P65.514 billion of the reissued 20-year Treasury bonds, more than the government's offer of P35 billion.

“We saw interest rates aggressively declined with huge liquidity to deploy from maturities next week,” National Treasurer Rosalia V. De Leon told reporters after the auction.

“Markets also took signal from slower pace of rate hikes by US Federal Reserve and Bangko Sentral ng Pilipinas,” she added.

In December, Marcos administration plans to borrow less with a financing plan of P135 billion, down 32 percent from P215 billion in the previous month.

The bureau indicated that it will sell P30 billion worth of Treasury bills and P105 billion in Treasury bonds in the final month of 2022.