Gov't fails anew to borrow from local banks on high rates
The Bureau of the Treasury failed anew to secure borrowings from the domestic market for a second consecutive week as banks continued to demand higher interest rates amid Russia’s escalating war in Ukraine.
On Monday's auction, March 7, the national government rejected all bids for the three-month, six-month and one-year Treasury bills as investors sought higher returns for buying those securities.
National Treasurer Rosalia V. De Leon said after the auction that local creditors were asking for “higher risk premium” as market sentiment deteriorates due to escalating tension in Ukraine.
Moreover, De Leon noted that the weakening of the peso along with expected surge in inflation further fueled demand for higher yields on government securities.
Had the bureau accepted the tenders, the interest rate on the 91-day debt papers would have risen to 1.577 percent from 0.899 percent when the same IOU was successfully auctioned off last Feb. 21.
The government was supposed to sell P5 billion worth of the debt papers. Investors, however, were willing to buy more, as tenders reached P7.61 billion.
Meanwhile, the 182-day T-bill would have fetched an average rate of 1.967, up from 1.157 percent seen two week ago.
Total tenders for the six-month securities amounted to P6.459 billion, higher than the programmed P5 billion.
Lastly, the average rate of the 364-dat T-bill would have gone up to 1.943 percent from 1.568 percent during the last successful auction of the one-year IOU.
The bureau had planned to borrow P5 billion. Total tenders reached P7.165 billion.
Last week, Treasury bureau also rejected all bids for the short-dated papers and three-year Treasury bond (T-bond) after investors also demanded for higher yields.
The Bangko Sentral ng Pilipinas recently adjusted its average inflation projection for the year from 3.4 percent to 3.7 percent on account of the impact of higher prices of oil and some commodities in the international market, and effects on domestic costs.