T-bill rates increase

The Bureau of the Treasury (BTr) made a full award of the 91-day Treasury bills it auctioned off yesterday, but made a partial award of the 182and 364-day securities as the market continued to ask for higher rates amid uncertainties on the local and international fronts.

During yesterday’s auction, the BTr sold P5 billion worth of three-month T-bills at an average rate of 3.493 percent, up 14.7 basis points from the 3.346 percent recorded last April 10.

The auction was more than twice oversubscribed, with total tenders reaching P11.527 billion.

On the other hand, the auction committee only awarded P2.08 billion for debt papers maturing in 182 days after it capped the accepted rates at 3.8 percent.

As a result, the securities fetched an average rate of 3.684 percent, 47.8 basis points higher than the 3.206 percent recorded in the previous auction.

Demand for six-month notes was weak as tenders amounted to only P3.33 billion.

The average rate for the 364-day T-bills rose by 39.6 basis points to 3.83 percent from the previous rate of 3.434 percent even as the auction committee accepted only P1.735 billion of the total bids.

Total tenders amounted to P3.435 billion, almost half the P6 billion original offering.

National deputy treasurer Erwin Sta. Ana said the results of the auction reflected the market’s continued preference for debt papers with shorter tenors, brought about by expectations of rate hikes in the US, domestic inflation and geopolitical tensions in Syria.

“Basically, our GSED (government security eligible dealers) are favoring the shortest tenors on issue. We think that it’s about the hawkish stance of the Fed (US Federal Reserve). The minutes have gone out last week...I think reportedly the three rate hike cycles are still on the table,” Sta. Ana said.

“Of course there’s a new development in the geopolitical perspective in Syria so market is also factoring that and also the domestic inflation picture,” he said.

Despite the rejection of bids, Sta. Ana said the national government is still positioned comfortably in terms of its cash buffer.

“I think we have some leeway with respect to the bids submitted by our GSEDs. But at the end of the day we are consulting with them,we are talking to them quite regularly so that we would know what the feedback is from the market side,” he said.