T-bill rates up

MANILA, Philippines  —The government was able to borrow its target amount of P15 billion during Monday’s sale of Treasury bills (T-bills) despite local creditors demanding higher rates for the sixth straight auction.

Auction results showed the T-bills attracted a total of P38.14 billion bids, exceeding the original size of the offer by 2.5 times.

But despite the strong demand, rates across all three tenors rose week-on-week.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said rates went up following recent volatility in the US dollar/peso exchange rate.

READ: Dollar steady at five-week peak as Fed rate cut bets tempered

The dollar strengthened to near three-month highs amid some political noise, especially over the weekend [and] reiteration of hawkish signals locally, Ricafort said in a commentary.

New rates

Broken down, rates for the 91-day debt securities went up to 5.598 percent, from 5.306 percent recorded last week.

The 182-day T-bills, meanwhile, fetched an average yield of 5.810 percent, more expensive than the 5.766 percent seen in the previous auction.

READ: Gov’t unveils P585-B local borrowing plan for Q1 2024

Lastly, lenders demanded an average rate of 6.076 percent for the 364-day debt paper, higher than last week’s 6.037 percent.

Documents from the budget department showed the Marcos administration is planning to borrow P1.85 trillion onshore in 2024.

Of that amount, P51 billion will be raised via T-bills while P1.8 trillion will come from weekly auctions of Treasury bonds.

Those borrowings are needed to help plug a projected budget hole of P1.39 trillion this year, which is equivalent to 5.1 percent of gross domestic product (GDP).

READ: Higher yield fails to spoil T-bills auction

Based on latest government forecasts, it is only in 2027 that the budget deficit, as a share of the economy, is expected to return to prepandemic level at 3.2 percent.

Finance Secretary Ralph Recto said the government would remain “prudent” in its debt management by continuing to adopt a 75:25 borrowing mix in favor of domestic sources.

Such a strategy, he explained, would “mitigate foreign exchange risks, take advantage of the abundant liquidity in the country’s financial system and support the development of the local debt and capital markets.” INQ