The benchmark interest rate on debt maturing in almost 12 years rose during an auction of government IOUs at the Treasury Office on Tuesday, November 15.
The interest rate on the 25-year IOUs, with a remaining life of 11 years and nine months, reached 8.168%, lower than the initial coupon rate of 9.250% sold in November 2009.
However, it was higher than the prevailing secondary market rates of 7.741% to 7.734%.
The Treasury gave a full allotment, as investors were willing to lend up to 80.953 billion pesos of the reissued 25-year treasury bills, more than the government’s offer of 35 billion pesos.
“The average rate, although higher than secondary market rates, already provides that the increase in key rates will be carried out by the Monetary Board,” National Treasurer Rosalia V. De Leon told reporters after the auction. .
The Treasury has also opened its payment facility window for the 11 Government Securities Eligible Dealers (GSED)-market makers to raise an additional 15 billion pesos.
Central Bank Governor Felipe M. Medalla said last Friday, November 11, that he would vote to raise the central bank’s policy rates by 75 basis points (bps) on Thursday, November 17.
“Since they [US Federal Reserve] increased by another 75 basis points, you can expect me to vote to raise the policy rate by a similar magnitude,” Medalla said in a recorded message at the Philippine Economics Journalists Association awards.
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