RATES picked up in Tuesday’s auction of P35-billion reissued 10-year Treasury Bonds (T-bonds) as regulators hinted getting more active in stemming economic dampeners.

Despite the increase in rates, the Bureau of the Treasury fully awarded the T-bonds on offer as the auction ended up more than twice oversubscribed.

Total submitted bids for the tenor reached P73.59 billion. With a remaining life of nine years and nine months, the debt paper is set to mature on July 22, 2031. Its coupon rate is set at 4 percent.

The security fetched an average rate of 4.689 percent, surging by 44.3 basis points from 4.246 percent in the previous auction.

National Treasurer Rosalia V. De Leon told reporters she believes the surge in rates was influenced by both international and local developments, particularly the Bangko Sentral ng Pilipinas’ (BSP) higher inflation forecast and the US Federal Reserve’s signal it may soon taper off on its bond purchases.

“Rates moved in tandem with UST (US Treasuries) now at 1.5 with taper signals and BSP higher inflation forecast for 2021 and 2022,” De Leon told reporters in a message.

Last week, BSP said inflation is now expected to average 4.4 percent, an upward adjustment from its previous target of 4.1 percent.

From 4 percent in July, inflation accelerated to 4.9 percent in August, the highest recorded since January 2019. With the August print, the country’s average 8-month inflation stood at 4.4 percent.

Monetary authorities also revised upwards their inflation forecast for next year from 3.1 percent to 3.3 percent. For 2023, inflation is expected to average at 3.2 percent from the earlier 3.1 percent projection.

The auction committee decided to open the tap facility last Monday for an additional P5-billion offering for the same tenor to market makers under the government securities eligible dealers program, according to the National Treasurer.

For this month, the Treasury is set to borrow a total of P250 billion from the local debt market, higher than the P200 billion program in August.

This year, the national government programmed to borrow a total of P3.1-trillion, most of which is expected to be raised through domestic sources.

The government borrows to meet its spending requirements as well as to finance its budget deficit.

As of end-July this year, the national government’s outstanding debt has already piled up to a new record-high of P11.61 trillion, swelling by 26.7 percent from P9.16 trillion a year ago.

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