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Seven-year interest rate rises

The national government borrowed less than expected after interest rate for long-term Philippine debt papers rose.

At the Bureau of the Treasury auction on Tuesday, June 14, the yield for the seven-year Treasury bond with a remaining life of six-year and 11-months settled at 6.740 percent.

The yield is above the 6.494 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 P62.296 billion of the T-bonds, but the government only accepted P19.551 billion worth of bids, lower than the P35 billion program.

National Treasurer Rosalia V. De Leon said the government opted a partial award for the offering due to higher interest rates.

“Markets remain defensive with slew of news both from US Federal Reserve and Bangko Sentral ng Pilipinas (BSP) to take action to fight surge in prices,” de Leon told reporters after the auction.

Last June 14, Philippine benchmark interest rates for short-term loans rose also due to expectations of higher inflation.

The bellwether 91-day Treasury bill rate, which banks use in pricing their loans, increased to 1.572 percent from 1.440 percent previously.

Yield on the 182-day T-bill also jumped to 1.934 percent from the previous 1.834 percent.

Moreover, interest rates on the 365-day T-bill went up to 2.325 percent from the previous 2.297 percent.

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