3-year T-bond rate climbs to 6.436%

The average rate of the government’s three-year Treasury bond (T-bond) rose to 6.436 percent yesterday from 5.735 percent which was the rate of a comparative debt paper auctioned in January.  

Finance Undersecretary and Acting National Treasurer Roberto Tan attributed the rise in rates to the higher-than-expected inflation rate.  Inflation or the rise in consumer prices has been going up due to skyrocketing oil and food prices.

Inflation rose to 6.4 percent in March from 5.4 percent in February. 

“The main driver is inflation expectations and the policy response of the Bangko Sentral ng Pilipinas (BSP),” Tan said. Monetary authorities are scheduled to meet on April 24 for its next rate-setting meeting.  

During yesterday’s auction, the government accepted P4.505 worth of bids as total tenders reached P10.135 billion.  

Tan said inflationary pressures and tightening liquidity have been pushing the rates upward.  

The BTr had been receiving unreasonably high offers from banks during the past five auctions, partly due to political uncertainties which President Arroyo has been facing. 

However, officials refused to attribute investors’ waning appetite on government securities to political uncertainties hounding the Arroyo administration.  

The Arroyo administration is facing yet another political crisis after a former government consultant, Rodolfo “Jun” Lozada testified before the Senate how the $330-million ZTE broadband network deal has been mired by bribery and corruption.  

The political uncertainties seemed to have offset the government’s gains on the fiscal side.  

Last year, the government’s fiscal position was at a deficit of P12.4 billion, significantly below the programmed deficit of P63 billion for 2007.