91-day T-bill rate rises to 1.889%

MANILA, Philippines—The Bureau of the Treasury on Monday rejected all bids for the six-month and one-year government securities, preventing what could have been a sharp jump in interest rates from historic lows.

The government accepted some bids for the 91-day treasury bills, pushing the yield on the benchmark debt paper to 1.889 percent, up 1.321 percentage points from the record low of 0.568 recorded in the previous auction held two weeks ago.

The rate could have been higher if all bids were accepted, the Treasury said.

On the other hand, with the total rejection of all bids for the six-month and one-year debt paper, the interest rates for the 182- and 364-day bills remained at 0.95 percent and 2.032 percent, respectively.

National Treasurer Roberto Tan said in a briefing following Monday’s auctions that the move to reject most bids was meant to ensure the latest interest rates would not be too far from levels seen in the secondary market.

The government was originally targeting to raise P1.5 billion from the sale of three-month government securities, but ended up accepting only P1.4 billion.

It was also supposed to sell as much as P3.5 billion and P4 billion worth of six-month and one-year bills.

Some analysts, however, said the move of banks to seek higher interest rates was expected given that the historically low interest rates did not make sense for prudent investors.

They said the record-low interest rates seen two weeks ago were unsustainable as investors could simply put funds in other instruments that gave higher yields.

The drop in treasury bill rates to very low levels two weeks ago was attributed to the growing liquidity being managed by banks in the country.—Michelle V. Remo