Treasury: Local creditors prefer short-term debt amid US Fed rate hikes
Bureau of the Treasury (From the Facebook account of the bureau)
MANILA, Philippines—The Bureau of the Treasury (BTr) on Monday (April 18) raised P15 billion from short-dated T-bills despite creditors’ preference for the benchmark 91-day debt paper in the wake of policy tightening in the United States.
National Treasurer Rosalia de Leon said “good” demand for treasury bills was boosted by P27 billion in IOUs that matured, adding liquidity to the debt market.
Bids of government securities eligible dealers (GSEDs) totaled more than P54 billion across the three T-bill tenors, making the auction 3.6 times oversubscribed.
More than half of the total tenders amounting to P26.2 billion was attracted by the three-month treasury bill, such that its average rate declined to 1.223 percent from 1.25 percent last week.
“The market was biased on the short end, with the anticipated aggressive Fed actions of combined policy rate hikes and balance sheet runoff as reflected in the Fed minutes,” De Leon said.
Inflation in the US hit 40-year-highs amid skyrocketing food and oil prices, such that market watchers expect the US Federal Reserve to follow up its 25-basis point (bp) interest rate hike in March with bigger increases within this year.
While the BTr also fully awarded P5 billion each in the 182- and 364-day securities, these longer tenors fetched higher rates than last week’s auction.
Yield for six-month debt inched up to 1.568 percent from 1.555 percent previously, while the annual rate of one-year IOUs rose to 1.877 percent from 1.857 percent.
