Philippine T-bill rates up anew

MANILA--Rates of the Philippine Treasury bills (Tbills) rose again Monday as banks anticipate an increase in the Federal Reserve’s key rates this month.

Average rate of the benchmark 91-day bill rose to 1.55 percent from 1.48 percent during the auction last Nov. 14.

The auction committee made a full award for this tenor from total bids of P11.21 billion, higher than the P8-billion offering.

The rate of the 182day paper rose to 1.87 percent from 1.80 percent in the previous session.

This tenor was offered for P6 billion but received P5.218 billion worth of bids. The auction committee awarded P3.058 billion worth of this paper.

On the other hand, bids for the 364-day Tbill were rejected after rates rose beyond two percent. This is the second time in a row that bids for the one-year paper were rejected.

It was offered for P6 billion but total tenders only amounted to P3.55 billion.

National Treasurer Roberto Tan told reporters after the auction that results of Monday’s auction were “driven mainly by the Fed meeting that is being anticipated.”

Federal Reserve’s Fed- eral Open Market Committee (FOMC) will have its last meeting for the year on Dec. 13 and 14 and Fed futures show over 90 percent probability of an increase in the key rates.

If the rate hike transpires, this will be the second time after the rate increase in December 2015 -- the first in almost a decade.

Tan said these anticipations resulted in investors making “a lot of positions for shorter term” debt instruments.

He said banks are also holding on to cash, cit- ing results of the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) auctions last week, which were undersubscribed – the first time it happened since the facility started operations last June.

”A lot of players are now standing on the sideline. Probably (they) will be waiting for the Fed decision and even probably waiting for the reaction of the Bangko Sentral on Dec. 22,” he said referring to the last policy meeting of the central bank’s Monetary Board (MB) for the year.

BTr will have its last Treasury bond (T-bond) auction for the year on Tuesday, wherein P25 billion worth of five-year paper will be offered.