Yield on 91-day T-bill continues to drop

The national government again borrowed lower than the planned amount, raising P9.62 billion out of the P15-billion offering of Treasury bills, as partial awards showed mixed results.

The auction committee led by the Bureau of the Treasury (BTr) was again able to award all P5 billion of the benchmark 91-day T-bills.

Still, the committee again resorted to partial awards for the 182-day bills at P2.1 billion and the 364-day bill at P2.52 billion.

With the latest results, the interest rate for the three-month bills decreased by 17 basis points (bps) to an average of 4.205 percent from 4.375 percent previously.

Similarly, the rate for the six-month bills went down by 0.1 bp to 4.92 percent from 4.921 percent. On the other hand, the rate for the yearlong bills went up by 0.8 bp to 5.15 percent from 5.142 percent.

“The resulting rates are aligned with the secondary level and the award of T-bills provides good supply for the market to deploy short term liquidity,” National Treasurer Rosalia de Leon told reporters.

Monday’s auction results showed that prevailing rates at the secondary market were 2.8 bps lower for the 91-day bills at 4.177 percent,.4 bp higher for the 182-day bills at 4.924 percent, and 6.9 bps lower for the 364-day bills at 5.081 percent.

For the three tenors, investors made available a total of P35.787 billion, the 364-day T-bills being undersubscribed with only P402 billion tendered.

The three-month bills were oversubscribed by more than five times with 25.987 billion tendered as were the six-month bills with P5.78 billion tendered.

First Metro and UA&P said in their latest monthly research that the upward pressure on local bond yield remained in general, considering the interest rates in the United States were still rising due to unabated policy rate hikes implemented by the US Federal Reserve.

Another reason is that the path of inflation in the Philippines, which has accelerated to a 14-year high at 7.7 percent in October, remained uncertain.

“The BTr appears willing to let yields rise either because it has little cash left or it wants to respect market behavior or both,” they said.

“However, since it has boosted its cash position by P718 billion [for the period January to September 2022], we think it has the capacity to continue rejecting some throw-away bids in its remaining auctions,” they added. “But it will continue to bolster its cash position as long as yields rise only moderately.”