T-bill rates climb for third straight week

MANILA, Philippines — The government sold P15 billion of short-term debt, as targeted, on Monday’s auction of Treasury bills (T-bills) despite interest rates rising for the third straight week.

Creditors placed total bids amounting to P44.84 billion, exceeding the Bureau of the Treasury’s offering size.

But the robust appetite did not stop rates from rising again.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said rates rose as markets remained wary of tensions in the Middle East and the possibility of a later rate cut by the US Federal Reserve.

“Treasury bill average auction yields were slightly higher for the third straight week … after more hawkish signals from some Fed and other local monetary officials recently,” Ricafort said.

READ: T-bills, T-bonds rates climb

Yields also climbed week-on-week “in view of the conflict between Israel-Iran/proxies recently that increased tensions in the Middle East,” he added.

Tensions in the Middle East

According to the Treasury, the 91-day T-bill fetched an average rate of 5.888 percent, higher than the 5.870 percent recorded in the previous auction.

Similarly, lenders demanded an average yield of 6.002 percent for the 182-day debt securities, up from 5.973 percent last week.

The average rate for the 364-day T-bill rose to 6.080 percent, from 6.044 percent previously.

Documents from the budget department showed the Marcos administration is planning to borrow P1.85 trillion onshore in 2024. Of the amount, P672.1 billion will be raised via T-bills while P1.8 trillion will come from weekly auctions of Treasury bonds.

READ: Marcos admin to borrow P585B from local creditors in Q2

Those borrowings are needed to help plug a projected budget hole of P1.5 trillion this year, equivalent to 5.6 percent of gross domestic product.

Despite the government’s decision to accept higher T-bill rates, RCBC’s Ricafort said the government’s fiscal balance in April could benefit from the filing of income tax returns.

”Seasonal increase in tax revenue collections in April could help increase the national government’s cash position and improve the fiscal position in terms of a narrower budget deficit, at the very least, or could even lead to a possible budget surplus for the month—a consistent pattern seen for many years,” he said. — INQ