T-bill rates up across the board ahead of expected BSP rate hike

Treasury bill rates rose across the board on Monday on expectations that the Bangko Sentral ng Pilipinas (BSP) will further raise key interest rates by as much as 50 basis points (bps).

The Bureau of the Treasury (BTr) raised  all of the P15 billion it wanted to borrow, but government securities eligible dealers (GSEDs) offered to lend at yields higher than last week’s.

The BTr awarded P5 billion in benchmark 91-day treasury bill at an average rate of 1.874 percent, up from 1.85 percent last week.

It also raised P5 billion through 182-day IOUs at 3.226 percent, up from 3.211 percent previously.

The P5 billion in 364-day debt paper fetched an annual yield of 3.712 percent, up from 3.635 percent.

“Rates climbed on all tenors with markets expecting the Monetary Board to raise rates this Thursday,” National Treasurer Rosalia de Leon said.

“Similarly, the United States Federal Reserve seems unswayed with softer July CPI [consumer price index inflation rate], and US Fed Chair Jerome Powell remains focused on ‘vanquishing the foe,'” De Leon added.

GSEDs were willing to lend the BTr as much as P40.5 billion across the three tenors, or 2.7-times more than the borrowings intended for Monday’s auction.