Treasury moves to stem rising debt yields

To temper rising yields due to inflationary pressures, the Bureau of the Treasury only awarded two-thirds of the amount of T-bills offered Monday.

National Treasurer Rosalia V. De Leon told reporters after the auction that the Treasury prevented a big spike in rates, such that it sold a total of P10.36 billion out of the P15-billion offering.

Rates increased by an average of 22.13 basis points across the 91-, 182- and 364-day
T-bills, the Treasury said.

“We just have to make sure that the rates don’t go very high with very steep increments because we recognize that the market could be demanding higher rates because of the increasing inflation expectations,” De Leon said, explaining rates were seen to go up due to market expectations that the US Federal Reserve would likely hike interest rates—the first of three rate hikes expected this year—by March.

The Bangko Sentral ng Pilipinas last week raised its inflation forecast for 2017 to 3.5 percent from 3.3 percent previously due to increasing fuel prices and the peso’s depreciation since the fourth quarter of last year.

“The decision to cap the accepted bids was seen to gradually move the market amid the upward adjustment of benchmark rates driven by local as well as international developments,” the Treasury said.

Also, “global uncertainty remains heightened, awaiting a clearer direction for US fiscal and monetary policy as well as political moves in the Eurozone,” the Treasury added.

The Treasury accepted P4.295 billion out of the P6-billion offering for 91-day T-bills at a rate of 2.252 percent.

The Treasury also sold P3.57 billion out of the P5 billion in 182-day IOUs, accepting an average rate of 2.467 percent.

For the 364-day debt paper, only P2.495 billion were awarded out of the P4-billion offer at an annual rate of 2.766 percent.

The auction was nonetheless oversubscribed, attracting tenders totaling P17.42 billion.