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Treasury bill rates rise across the board

/ 08:05 PM September 02, 2013

Treasury bill rates rose across the board Monday as fears about the tension in Syria and expectations of a tapering of easy monetary policy in the United States gripped the local capital market.

The Bureau of the Treasury’s auction committee was forced to reject a substantial amount of bids for the 91-day bills, raising less than what it had targeted to avoid a steep rise in its yield.

The rate for the three-month government securities rose 27.7 basis points to 0.866 percent. The rate could have breached the one-percent mark and gone as high as 1.127 percent if not for the partial rejection of bids. Total amount of bids amounted to P7.27 billion while the government’s debt offering was at P4 billion. The auction committee accepted only P1.65 billion worth of bids.


“Expectations that QE (quantitative easing) tapering would happen in September pushed the market to seek higher rates for the 91-day bills,” National Treasurer Rosalia de Leon told reporters yesterday after the auction.

Anticipation that the US Federal Reserve would reduce the amount of its monthly bond purchases led to speculation that portfolio investments to emerging economies would eventually shrink. This fear is becoming self-fulfilling as it has prompted some foreign fund owners to leave emerging markets to avoid potential losses from depreciating currencies and the declining value of securities.

The rate for the 182-day bills rose 2.3 basis points to 0.92 percent. Demand for the government securities, however, remained significant as the market continued to enjoy enormous liquidity. Bids for the six-month debt paper reached P12.3 billion compared with the government’s debt offering of only P6 billion. The auction committee decided to accept P6 billion worth of bids.

The rate for the 364-day bills inched up by 2.2 basis points to 0.955 percent. Tenders for the one-year government securities amounted to P18.32 billion, higher than the government’s debt offering of P10 billion. The auction committee accepted P10 billion worth of bids.

De Leon said market players were likewise concerned with the developments in Syria, where the ongoing civil war is feared to eventually cause a disruption to oil supply from the Middle East.

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