Philippine 20-year bond yields rise amid US inflation concerns

On Tuesday, Feb. 25, investor concerns over US inflation risks led to higher interest rates on long-term government bonds in the Philippines.

The Bureau of the Treasury (BTr) successfully raised ₱25 billion through an auction of reissued 20-year bonds, receiving bids totaling ₱39.06 billion and fetching an average yield of 6.376 percent.

These treasury bonds were awarded at a rate higher than comparable corporate bonds and the previous PHP BVAL yield, with the auction being 1.56 times oversubscribed.

According to Michael L. Ricafort from RCBC, rising US Treasury yields influenced by the 'Trump factor' have contributed to increased rates on long-term debt securities in recent months.

Despite domestic policy boosts such as RRR cuts and exiting the global money-laundering watchlist, investor demand for long-term bonds remains lower compared to shorter-term ones due to inflation concerns.

The Bangko Sentral ng Pilipinas' (BSP) announcement of further cutting banks' reserve requirement ratios (RRR) influenced Tuesday's auction, with decent demand observed within expected range.