MANILA, Philippines – Interest rates of national government debt slipped to their lowest level in three months in July even as the peso weakened, data from the Bureau of the Treasury showed.
The weighted average interest rate of government liabilities inched down to 5.06 percent in July from 5.07 percent in the first semester and 5.09 percent in May.
It matched the level hit at the beginning of the year and was just a notch higher than April’s 5.05 percent, which was the lowest achieved so far for 2016.
Earlier, Jonathan Ravelas, chief market strategist at BDO Unibank Inc. said the peso’s weakness and the impending increase in US interest rates should not be a cause for concern.
“I don’t think it will have an impact on our debts. It’s not alarming since we have also decreased significantly our reliance to foreign funding,” Ravelas said in a phone interview.
“The new administration will maintain the borrowing program, which is 80 percent (sourced) locally and 20 percent (abroad). There should not be any problem,” he said earlier.
Business ( Article MRec ), pagematch: 1, sectionmatch: 1
Lower interest rates allow the government to shell out less money for debt settlements and funnel them to social and economic projects.
Broken down, existing external debts actually enjoyed lower rates than their local counterparts, data showed.
Foreign obligations maintained their average interest rate of 4.46 percent in the first seven months. Domestic debts fetched a higher 5.39 percent, down from 5.4 percent in the first half.
Loans received by agencies were charged an average 1.52 percent, while foreign-denominated securities had 6.31 percent.
A mixed picture, meanwhile, could be noticed in the local debt portfolio, figures showed.
From January to July, average Treasury bill rate rose to 1.72 percent from 1.49 percent. T-bond yields, on the other hand, dipped to 5.68 percent from 5.7 percent.
T-bonds have longer payment terms than T-bills. Both are floated twice a month by the Treasury.
Should the US Federal Reserve raise rates next week, 91.44 percent or P5.47 trillion worth of government debt will also not be affected since they have fixed rates.
Only 8.42 percent or P504 billion were charged with floating rates that change according to market movements. The figure was down from 8.46 percent in the first half.
