TREASURY RAISES P 35B FROM SALE OF REISSUED BONDS

The Bureau of the Treasury on Tuesday raised P35 billion from reissued seven-year bonds despite the higher yield demanded by investors due to inflation concerns.

The Treasury sold all of the debt paper it offered, which had a remaining life of six years and 10 months before maturity, at an average annual rate of 3.826 percent, up from 3.789 percent when the same IOUs were reissued early this month.

“The rate went up due to lingering inflation concerns,” National Treasurer Rosalia de Leon said.

Oversubscribed

UK-based think tank Pantheon Macroeconomics said that while it expected the Bangko Sentral ng Pilipinas (BSP) to keep the policy rate at a record-low of 2 percent on Thursday, “further upward revisions to the BSP’s inflation forecasts are likely, especially after the headline rate’s hefty jump in August.”

The rate of increase in prices of basic commodities jumped to a 32-month high of 4.9 percent year-on-year last month due to more expensive food, especially fish and vegetables.

“The reacceleration in inflation is far from over, and it is likely to remain well above the upper bound of the [BSP’s 2-4 percent] target range until mid-2022,” Pantheon Macroeconomics senior Asia economist Miguel Chanco said.

Despite worrying inflation, investors tendered P76.13 billion, making the auction for these treasury bonds two times oversubscribed.

To date, this bond series has an outstanding volume of P130 billion.

The Treasury also opened its tap facility window to sell another P5 billion of the securities to the 11 government securities eligible dealers-market makers.