Yields of Shorter term T-bills end lower

The Bureau of the Treasury on Monday only partially awarded the 364-day bills it offered as yields inched up while the market braced for likely further elevated inflation for May as well as a looming interest rate hike in the United States.

The Treasury accepted P4.24 billion out of the P6-billion on offer for the one-year IOUs even as tenders reached P6.85 billion.

It capped the annual rate at 4.246 percent, up from 4.198 percent last week.

National Treasurer Rosalia V. de Leon told reporters after the auction that market appetite remained on the short end of the curve, with rates for the shorter tenors trending downward given expectations of sustained high inflation in May and a “near certainty” that the US Federal Reserve would raise rates this month after unemployment declined to a nearly five-decade low.

Over the weekend, the Department of Finance said that it expected the headline inflation rate to have hit a new five-year high of 4.9 percent last month.

For the 91-day bills, the Treasury accepted all of the P5 billion it offered, with bids amounting P12.25 billion.

The average rate for the three-month government securities declined to 3.296 percent from last week’s 3.3 percent.

As for the 182-day bills, all P4 billion were awarded out of the P10.58 billion tendered by investors.

The yield for the six-month paper also slid to 3.677 percent from 3.7 percent during the previous auction.

In all, the Treasury raised P13.24 billion out of the P15-billion offering, while bids totaled P29.67 billion for the three tenors.

The Treasury said that the “submitted bids were also lower than prevailing secondary market benchmarks.”

Meanwhile, De Leon said that the Treasury had already sought Monetary Board approval for the planned $1-billion samurai bond sale.

The yen-denominated bonds would likely be sold in Japan by early August or September, De Leon said, across at least three tenors: Three, five, seven or 10 years.

“We also have to continue to be watchful of the market because we want to get good pricing,” according to De Leon, noting that the upcoming issuance would be on a stand-alone basis, while the previous samurai bond sale in 2010 was guaranteed by the Japan Bank for International Cooperation.