Treasury bill rates end mixed

MANILA, Philippines — The government was able to borrow its planned amount of short-dated debt during Tuesday’s sale of Treasury bills (T-bills), even as rates were mixed following “dovish” signals from local monetary officials.

The Bureau of the Treasury raised P15 billion via T-bills as planned as total bids reached P40.3 billion, surpassing the original size of the issuance by nearly three times.

Broken down, the 91-day T-bill fetched an average rate of 5.666 percent, cheaper than the 5.667 percent recorded in the previous auction.

For the 182-day paper, lenders asked for an average yield of 5.914 percent, higher than the 5.908 percent last week.

The rate for 364-day T-bills averaged 6.046 percent, up from the previous auction’s 6.039 percent.

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Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said rates were mixed after “dovish signals recently from local monetary authorities,” citing a statement from Finance Ralph Recto which signaled a 150 basis points (bps) rate cut in the next two years.

Some fear that these cuts – especially if done ahead of the US Federal Reserve – will further weaken the local currency and stoke inflation.

The Monetary Board has kept its benchmark rate steady at a 17-year high of 6.5 percent, following cumulative hikes of 450 bps to combat inflation.

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Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. also said the earliest the central bank can begin cutting rates is in August, with a total of 25 to 50 bps rate cuts this year.

Meanwhile, the US Federal Reserve kept its benchmark overnight interest rate in the current 5.25 to 5.5 percent range in its two-day meeting last week.

The government is looking to raise P195 billion from the local market via T-bills and P390 billion from Treasury bonds.