T-bill rates rise for 4th week

MANILA  -The government again failed to raise its targeted amount of short-term debt during Monday’s sale of Treasury bills as investors demanded higher interest rates for the fourth straight week.

The Bureau of the Treasury borrowed only P11.9 billion via T-bills out of the P15 billion it was hoping to borrow from local investors, auction results showed.

This, despite total bids amounting to P19.4 billion, bigger than the size of the issuance.

The high demand, however, did not stop borrowing costs from going up for another week.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said investors sought higher yields after the Bangko Sentral ng Pilipinas hinted at resuming its monetary policy tightening, and amid the ongoing crisis in Israel.

READ: BSP may opt to hike rates by 25 bps or keep unchanged, says Philippines’ finance chief

“T-bill auction yields were again higher after the latest signals from local monetary authorities on a possible +0.25 local policy rate hike that cannot be ruled out in November 2023,” Ricafort said in a Viber message.

Broken down, the Treasury only sold P3.6 billion of the 91-day T-bill out of the targeted amount of P5 billion. Rates for the tenor averaged 5.990 percent, higher than 5.806 percent seen last week.

Partial award

The government also made a partial award of the 182-day debt paper and accepted bids amounting to P3.3 billion, also below the planned amount of P5 billion. The T-bill fetched an average rate of 6.207 percent, up from the previous week’s 6.115 percent.

Interestingly, the 364-day T-bill was the only tenor that was fully awarded at P5 billion despite rates averaging 6.388 percent, higher than last week’s 6.305 percent.

RCBC’s Ricafort said the state was able to borrow as planned since the tenor has the highest bids at P7.714 billion and the lowest week-on-week increase in yield.

The government borrows money from creditors at home and abroad to bridge its budget gap, which is capped at 6.1 percent of gross domestic product this year.

For October, the Treasury is targeting to raise P150 billion worth of domestic debt, P60 billion of which would be via T-bills. INQ