INQUIRER FILE PHOTO
MANILA -The cost of short-term borrowings for the government went up across the board, forcing the Bureau of the Treasury (BTr) to make partial awards again on each of the three tenors to minimize the increase amid expectations of renewed interest rate hikes.
On Monday, the auction committee led by the BTr raised only P9.2 billion out of a total of P15 billion on offer.
The average rate on the benchmark 91-day Treasury bills (T-bills) increased by 7.4 basis points (bps) to 6.15 percent from 6.086 percent last week.
In the auction held on July 3, the committee awarded P2.954 billion out of the P5 billion offer of three-month T-bills.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said T-bill auction rates continued to go up for the fifth straight week.
“This came after the week-on-week increase in the comparable Philippine BVAL (Bloomberg Valuation Service) yields and US government bond yields to 3.5-month highs or since March 2023 after the recent hawkish signals from US Federal Reserve (Fed) officials,” Ricafort said.
He added the markets had recently priced in a possible 0.25 Fed rate hike on July 26, which he said the Bangko Sentral ng Pilipinas might match to maintain healthy interest rate differentials.
Curbing the increase
Had the BTr-led auction committee gone with a full award, the average rate would have jumped by 13.9 bps to 6.225 percent.
Also, the committee awarded P2.67 billion of the 182-day T-bills and P3.595 billion of the 364-day T-bills.
The new average yield for the six-month bills ended 12.2 bps higher at 6.266 compared with the previous 6.144 percent.
The average rate for the year-long bills went up by 6.7 bps to 6.286 percent from 6.219 percent.
If full awards were made, the rates would have respectively increased by 28.1 bps to 6.425 percent, and 17.6 bps to 6.395 percent.
“The auction was 1.2 times oversubscribed, attracting P17.4 billion in total tenders,” the committee said in a statement.
Further, average yields were higher across the board compared with prevailing rates at the secondary market.
BVAL average for the 91-day T-bills was lower by 3.9 bps at 6.111 percent. Also, average for the six-month bills was 8.4 bps lower while that for the year-long bills was 6.8 bps lower.
The BVAL rate for the 182-day debt paper was pegged at 6.182 percent and for the 364-day debt paper at 6.218 percent.
-CSN
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