Banks pressed for an increase in Philippine benchmark interest rates for short-term loans as the government mulls borrowing from small investors before the end of the year through the sale of retail Treasury bonds (RTB).
At Monday's auction of Treasury bills on Nov. 8, the bellwether 91-day T-bill rate, which banks use in pricing their loans, rose to 1.143 percent from 1.130 percent previously. The Bureau of the Treasury sold the P5 billion worth of three-month debt papers on offer.
Demand for the 91-day government IOUs reached P14.531 billion
Yield on the 182-day T-bill also increased to 1.401 percent from the previous 1.395 percent as investors were willing to buy P15.26 billion of the six-month IOUs. The government only accepted P5 billion.
Likewise, interest rates on the 365-day T-bill climbed to 1.616 percent from the previous 1.613 percent with total tenders for the one-year paper amounting to P12.725 billion, of which the government accepted P5 billion.
National Treasurer Rosalia V. de Leon said interest rates rose at a much slower pace this week after inflation last month decelerated, while the US Federal Reserve's tapering of its asset purchase program was already priced into markets.
“Following the deceleration in inflation and no market tantrum to Fed announce of tapper, we did not see significantly rise in rates,” de Leon told reporters after the auction.
Meanwhile, de Leon said that the government is planning to sell retail treasury bonds to provide some outlet for liquidity.
“We’re planning for RTB sale as markets are still looking for outlets to deploy liquidity,” the treasurer said.
However, she said the planned retail bond sale is “not jumbo RTB.”
Last March, the government raised P463.3 billion from an RTB offering, a portion of which was used to boost the country’s war chest to fight the prolonged pandemic.
The three-year retail bonds were priced at a coupon of 2.375 percent. Small investors were allowed to buy these in minimum denominations of P5,000.