Treasury bill yields inch up; 91-day rate at 0.217%

The historic-low interest rates in the previous auction proved unsustainable as the yields on treasury bills Monday jumped across the board after banks sought higher returns.

The Bureau of the Treasury was forced to reject some bids for six-month and one-year debt instruments to avoid a big jump in interest rates. The rate for the benchmark 91-day bills rose 17.7 basis points to 0.217 percent yesterday from the 0.04 percent in the previous monthly auction.

Demand for the three-month debt paper was strong as bids reached P5.16 billion compared with the P4 billion on offer. However, Deputy National Treasurer Eduardo Mendiola said some of the bids were not competitive as the rates sought were even higher than the latest yields in the secondary market. As such, the government accepted only P4 billion worth of bids, thus sticking to the borrowing program.

The 182-day bills fetched 0.398 percent, up 18.2 basis points from 0.216 percent.

Bids for the six-month debt papers amounted to P6.01 billion, slightly exceeding the offering of P6 billion.

Notwithstanding the over-subscription, the Treasury accepted only P4.75 billion worth of bids to avoid an even higher rate. Had it accepted more bids, the rate could have reached a high of 0.593 percent.

The rate for the 364-day bills rose 29.5 basis points to 0.602 percent from 0.307 percent. Tenders for the one-year debt paper reached P4.46 billion as against the government’s offering of P10 billion.

The Treasury accepted only P3.1 billion and rejected the rest to prevent a bigger increase. The rate for the one-year debt securities could have hit a high of 0.91 percent had the government agency accepted all bids.