Rosalia de Leon
The government rejected all tenders for the benchmark 91-day as well as the 364-day Treasury bills as lenders asked for rates that would have jacked up yields by more than 100 basis points (bps).
These results played out as the global and domestic financial markets anticipate aggressive policy rate hikes by the Bangko Sentral ng Pilipinas (BSP) and the U.S. Federal Reserve later this week.
“The market was asking for higher rates as the U.S. Fed is expected to deliver another large rate hike, even a full percentage point [or 100 bps], which is determined to quell inflation” in the U.S., National Treasurer Rosalia de Leon told reporters.
On Monday, the auction committee led by the Bureau of the Treasury raised only P3.162 billion out of the total P15-billion goal or P5 billion for each tenor. This amount represented a partial award to investors of the P5-billion offer of the 182-day debt paper.
The interest rate for the six-month T-bill increased by 17.6 bps to an average of 3.81 percent from 3.634 percent. This was 34.1 bps higher than the 3.469-percent prevailing rate at the secondary market.
Had the committee fully accepted the tenders for the 91-day T-bill, the benchmark rate would have surged by 159.45 bps to average at 3.912 percent from 2.318 percent in the previous auction.
Similarly, a full award would have raised the rate on the 364-day debt paper by 110.8 bps to an average of 4.89 percent from 3.782 percent.
In a statement, the committee noted that the auction “was barely oversubscribed with total bids reaching P16.3 billion relative to the P15-billion offering.”
Lenders made available a total of P5.965 billion for the 91-day bill and P7.123 billion for the 182-day bill. The 364-day bill was undersubscribed with only P3.2 billion of tenders.
In the international market, the BSP and the Department of Finance welcomed Moody’s Investor Service’s latest credit rating action affirming the national government’s investment-grade credit rating of “Baa2” with a “stable” outlook.
An investment grade rating indicates lower credit risk, allowing a country’s government to access funding at lower cost to the public.