Benchmark 91-day T-bills slightly drop

The Bureau of the Treasury (BTr) yesterday made a full award of the 91-day and 182-day Treasury bills, but decided to partially decline bids for the 364-day securities to temper the increase in interest rates.

Yields for the 91-day T-bills declined by 9.6 basis points to settle at 3.308 percent from last week’s 3.404 percent.

The auction was almost four times oversubscribed, with total tenders reaching P15.8 billion compared to the P4 billion offering.

Rates submitted for the 182-day Tbills averaged 4.045 percent, 10.8 basis points higher than the 3.937 percent recorded in the precious auction.

Strong demand met the auction as total bids reached P6.139 billion, exceeding the issue size.

On the other hand, the auction committee decided to cap the accepted rates for securities maturing in 364 days, resulting in a total awarded size of P4.399 billion. This was lower than the P6 billion original offering volume.

As a result, the average rates for the one-year debt papers settled at 4.67 percent, 10.4 basis points higher than 4.566 percent last week.

The auction was oversubscribed with tenders reaching P8.051 billion.

According to National Treasurer Rosalia De Leon, the results of the auction reflected the market’s continued preference for short-term securities.

De Leon said investor preference for the shorter term tenors was due to concerns on inflation – which she said puts pressure on the Bangko Sentral ng Pilipinas (BSP) to further hike interest rates – as well as expectations of another US Fed rate hike.

“We see that the preference again continues to be on the short-dated papers, particularly on the 91-day. Coming out of the inflation print of 5.2 percent, banks asked for higher yields except for the 91-day,” De Leon said.