Benchmark yields rise anew

Published May 23, 2022, 2:32 PM

by Chino S. Leyco

Investors continued to press for an increase in Philippine benchmark interest rates for short-term loans.

At Monday’s auction, May 23, the yield on the 91-day Treasury bill, which banks use in pricing their loans, rose to 1.675 percent from 1.531 percent when same instrument was sold two-weeks ago.

Benchmark yields rise anew

The government accepted P5 billion worth of bids for the three-month IOUs, even as investors were willing to buy as much as P21.629 billion of the debt papers.

The yield on the six-month IOU however also inched up to 1.892 percent from 1.500 percent three-ago.

The government was supposed to sell P5 billion of the 182-day T-bills, but opted to award only P3.5 billion. Demand reached P9.4 billion.

The bureau, meanwhile, rejected all tenders for the one-year debt papers. Had the government accepted the tenders, the interest rate on the IOU would have risen to 2.930 percent from 1.933 percent four-week ago.

Total tenders for the 364-day T-bills reached only P4.32 billion, below the government’s offer of P5 billion.

Last week, the Bangko Sentral ng Pilipinas (BSP) raised its key policy rates by 25 basis points to help temper the buildup of inflation expectations and in response to the strong rebound in the first quarter growth.

The Philippine Statistics Authority (PSA) had reported the country’s headline Inflation clocked in at 4.9 percent in April, faster than the 4.0 percent recorded in March and 4.1 percent in the same month in 2021.

The latest Inflation reading was the highest since the 5.2 percent in December 2018.

But despite the uptick, inflation rate in the first four months remained within the government’s target band of 2.0 percent to 4.0 percent, at 3.7 percent.