T-bill rates rise as BSP hikes rates

The consistent hawkish move of the Bangko Sentral ng Pilipinas (BSP) pounded the government’s short-term securities borrowing, with rates rising and demand slightly dipping.

The Bureau of the Treasury yesterday made a partial award of P13.05 billion in T-bills, short of the P15 billion target for the offering.

This is the second week of partial award for T-bills after four straight auctions of full award.

During yesterday’s auction, rates went down for the three-month tenor, but moved upward for the six-month and one-year offerings.

“Rates increased as an aftermath of the BSP rate hike and upward revision to average inflation for 2023,” national treasurer Rosalia de Leon said.

“The committee decided to keep rates aligned with the secondary level, thus partial awards for the 91- and 182-day T-bills,” she said.

Last week, the central bank raised anew key policy rates by 50 basis points, bringing the overnight reverse repurchase rate to six percent.

This has been the highest level since the 7.5 percent 16 years ago and effectively surpassed the 25-basis-point increase of the US Federal Reserve early this month.

Further, the BSP jacked up its inflation forecast to 6.1 percent from 4.5 percent for 2023 after the surprise 8.7 percent print in January. This is also above the 5.8 percent average last year.

During yesterday’s auction, rates for the 91-day T-bills went down by just 0.6 basis points to 4.413 percent. This is slightly below the secondary rate of 4.477 percent but is above last week’s 4.23 percent.

Still, the Treasury only awarded P3.55 billion out of the P5 billion offer.

On the other hand, the 182day short-dated debt papers saw rates increase by 0.6 basis points to 5.06 percent from the reference rate of 4.994 percent. This was higher as well from last auction’s 4.949 percent.

The Treasury raised P4.5 billion of the P5 billion target for the six-month tenor.

For the 364-day T-bills, rates averaged 5.455 percent, up by 10.7 basis points. Yields rose in comparison with secondary markets and from last week’s auction. A full award of P5 billion for the one-year T-bill was done.

Overall demand for the short-term securities reached P30.318 billion, oversubscribing the auction by 2.02 times.

Demand declined by six percent percent from the P32.182 billion in bids last week.

Bids went down to P7.33 billion for the 91-day and P12.988 billion for 364-day securities but increased to P10 billion for 182 days.

For February, the Treasury raised 96 percent of its P60 billion target for T-bills after it awarded a total of P57.68 billion.