The national government sold all the short-term debt papers it offered on the back of higher interest rates for the second time since it declined in November last year.

On Tuesday, Jan. 2, the Bureau of the Treasury held a successful auction for Treasury bills (T-bills), raising P17 billion, the intended target.

The total bids received were P39.945 billion, more than twice the target amount.

The Treasury accomplished its goal of raising P5 billion by selling 91-day T-bills, as the total bids amounted to P13.36 billion.

The average interest rate for the three-month papers soared from 4.996 percent in the previous week to 5.140 percent.

Further, the national government successfully allocated the full amount of P7 billion for the 182-day IOUs, with total bids reaching P14.360 billion.

The interest rate for the six-month T-bills also increased from 5.267 percent in the previous week to 5.578 percent.

Lastly, the Treasury achieved its target by raising P5 billion through the sale of 364-day debt papers. The total tenders received for the one-year tenor amounted to P12.225 billion.

Likewise, the average yield for the one-year securities increased from 5.732 percent in the previous week to 5.829 percent.

In contrast, the rates in the secondary market for 91-day, 182-day, and 364-day T-bills were higher at 5.244 percent, 5.518 percent, and 5.867 percent, respectively, based on the Bloomberg Valuation Reference Rates.

This may be due to higher comparable short-term interest rate benchmarks and absence of local policy rate cuts, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC).

However, this may be offset by a possible pause in US Federal Reserve rates for the rest of 2023 and possible Fed rate cuts as early as March or May this year, Ricafort stated.

The RCBC chief economist also cited the declining global oil prices which he said could help ease inflation and justify possible Fed and local policy rate cuts this year.