BTr partially awards 20-year Treasury bonds

The Bureau of the Treasury (BTr) opted for a partial award of the new 20-year Treasury bonds at Tuesday's auction. The bonds were issued with a coupon rate of 6.875 percent, surpassing the Bloomberg Valuation Service's rate of 6.672 percent.

Investor interest was strong, with bids totaling PHP37.9 billion, exceeding the PHP30 billion target and resulting in the auction being oversubscribed by 1.3 times. Ultimately, the BTr awarded PHP22.7 billion of the total bids.

Michael Ricafort, the chief economist at Rizal Commercial Banking Corporation, attributed the partial award to the elevated bid yields. He noted that the recent surge of the U.S. dollar/peso exchange rate to 18-month highs around the 58 level could increase import prices, potentially sparking a rise in inflation. This concern, however, was tempered by recent signals suggesting a less aggressive local monetary policy stance.

Additionally, Ricafort pointed out that most Federal Reserve officials have recently indicated a preference for maintaining higher interest rates for an extended period.