Gov’t downsizes T-bill offer as rates climb

MANILA,  Philippines  The government failed to fully raise its target amount of short-term debt paper during Monday’s sale of Treasury bills (T-bills) after rates sought by local creditors jumped for the ninth consecutive week.

Auction results showed the Bureau of the Treasury (BTr) borrowed P14.5 billion via T-bills, lower than the P15 billion it had hoped to raise.

This, despite the strong demand for the securities. According to BTr, the T-bills attracted total bids amounting to P30.44 billion, twice the original size of the issuance.

In a commentary, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said T-bill rates were “mostly slightly higher” this week, tracking an uptick in 10-year US Treasury yields after a higher-than-expected inflation stateside dashed hopes for an early rate cut by the US FEderal Reserve.

“Higher-than-expected US inflation reduced the odds of Fed rate cuts later in 2024,” Ricafort said.

READ: Rents boost US consumer prices in Jan

The decision to downsize yesterday’s T-bills issuance also came amid the ongoing offer for the government’s new Retail Treasury Bonds which, Ricafort said, could “siphon off some of the excess peso liquidity from the financial system and add to supply of government securities in the market.”

According to BTr, the 91-day T-bills fetched an average yield of 5.592 percent, costlier than the previous week’s 5.506 percent.

Average rates for the 182-day securities, meanwhile, went up to 5.927 percent, from 5.879 percent previously.

Creditors sought an average rate of 6.079 percent for the 364-day T-bills, more expensive than the 6.064 percent seen in the last auction. —Ian Nicolas P. Cigaral INQ

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