T-bill yields rise; 6-month, 1-year rates touch 1%

Treasury bill rates jumped across all tenors Monday, with the yields for the six-month and one-year debt paper hitting at least 1 percent for the first time since falling to record lows earlier this year.

This supported views that the regime of extremely low interest rates—or treasury yields below 1 percent—was nearing its end as investors seek higher yields.

As fund owners sought higher returns, the bellwether 91-day rate reached 0.9 percent in Monday’s monthly auction for short-term government securities, inching up 68.3 basis points from 0.217 percent in May. Demand for the three-month debt paper amounted to P9.4 billion compared with the government’s debt offering of only P4 billion.

National Treasurer Rosalia de Leon said a substantial portion of the bids was from foreign fund owners who found peso-denominated securities attractive given the economy’s favorable macroeconomic fundamentals.

The rate for the 182-day bills hit 1 percent, up 60.2 basis points from the previous yield of 0.398 percent. Bids for the six-month securities amounted to P10.1 billion compared with the P6 billion sold by the government.

The yield for the 364-day bills hit 1.25 percent, up 64.8 basis points from the previous month’s 0.602 percent. Tenders for the one-year debt paper amounted to P16.31 billion compared with the government’s debt offering of only P10 billion.

The Treasury’s auction committee decided not to accept more bids than what has been programmed for yesterday’s auction, saying the government did not need to over-borrow.