T-bill rates rise for 7th straight auction

T-bill rates rise for 7th straight auction

/ 02:09 AM February 06, 2024

MANILA, Philippines  —Rates sought by domestic creditors for short-term debt paper jumped for the seventh consecutive auction of Treasury bills after the better-than-expected economic growth last year gave the Bangko Sentral ng Pilipinas (BSP) room to keep its tight monetary policy for much longer until inflation shows a convincing slowdown.

The Bureau of the Treasury was able to borrow its planned amount of P15 billion during the sale of the benchmark T-bills.

The offering was met with strong demand from local lenders. Auction results showed the T-bills attracted total bids amounting to P47.5 billion, exceeding the original size of the issuance.


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


But that did not prevent rates from going up for the seven straight auction. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the BSP would likely stay hawkish following the release of above-consensus gross domestic product (GDP) growth in 2023.

Stronger than expected GDP data

Data showed the economy expanded 5.6 percent last year, beating economists’ predictions that had pegged growth at 5.5 percent. However, the 2023 expansion missed the Marcos administration’s 6 to 7 percent target.

“Stronger-than-expected GDP data could somewhat support hawkish stance locally as a matter of prudence to ensure inflation is well anchored toward the BSP’s target range amid risk of El Niño drought,” Ricafort said, adding that the market’s focus now is on the January inflation figure to be released Tuesday morning.

READ: 5.6% Philippine GDP growth in 2023 good enough for investors

Broken down, the 91-day T-bill fetched an average rate of 5.461 percent, up from the 5.398 percent seen in the last auction.

The 182-day debt paper were also more costly after creditors sought an average yield of 5.873 percent, higher than the previous week’s 5.810 percent.


However, the average rate for the 364-day tenor was at 6.075 percent, slightly cheaper than the 6.076 percent recorded in the last auction.

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

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

TAGS: auction, Business, Interest Rates, treasury bills

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