Investors push for higher interest rates on gov't loans
At A Glance
- Investors are pressing for an increase in benchmark interest rates for short-term loans.<br>The Philippine government successfully raised P15 billion through the full-award sale of Treasury bills at the latest weekly auction. Total tenders for the auction amounted to P40.202 billion, indicating strong demand.<br>The average rate for the 91-day Treasury bills increased by 4.3 basis points to 5.595 percent. <br>The average yield on the 182-day T-bills rose by 2.9 basis points to 5.968 percent.<br>The average rate for the 364-day T-bills increased by 4.6 basis points to 6.119 percent.<br>RCBC Chief Economist Michael L. Ricafort said interest rates have experienced a slight increase following signals of a potential policy rate hike in November from the Bangko Sentral ng Pilipinas (BSP).<br>Ricafort also said T-bill yields have also risen due to the BSP's higher inflation estimates.
Investors pressed anew for an increase in benchmark interest rates for short-term loans.
The national government raised P15 billion as planned with the full-award of Treasury bills at the weekly auction held Monday, Sept. 25.
The auction was near three-times oversubscribed with total tenders amounted to P40.202 billion.
The average rate on the benchmark 91-day Treasury bills increased by 4.3 basis points to 5.595 percent from 5.552 percent in the previous weekly auction.
The government raised P5 billion through the sale of the three-month papers as planned. Total bids received reached P10.045 billion.
Also, the average yield on the 182-day T-bills inched up by 2.9 basis points to 5.968 percent from 5.939 percent.
The government awarded the full amount of P5 billion for the six-month securities, with total demands hitting P16.28 billion.
Lastly, the average rate on the 364-day T-bills rose by 4.6 basis points to 6.119 percent from 6.073 percent.
The Treasury successfully raised P5 billion through the sale of the one-year debt papers, meeting the planned target. Total tenders for the one-year tenor reached P13.877 billion.
Meanwhile, at the Bloomberg Valuation Service (BVAL), the yield on the three-month bill was 1.5 basis points higher at 5.623 percent.
However, the yield on the six-month bill was 2.5 basis lower lower at 5.944 percent. The average rate for the 12-month bill was also lower 2.3 basis lower higher at 6.164 percent.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said interest rates have slightly increased due to recent indications from the Bangko Sentral ng Pilipinas (BSP) suggesting a potential policy rate hike in November.
The central bank indicated that it is likely this would not be the last increase and that similar hikes could continue until the first half of 2024, Ricafort noted.
He also noted that T-bill yields have risen following the BSP's upward revision of inflation estimates.
Additionally, Ricafort said short-term yields have increased week-on-week in response to more hawkish signals from the US Federal Reserve, which has hinted at a possible 0.25 percent rate hike.