Gov't upsizes T-bill award amid robust demand
At A Glance
- The national government raised the planned borrowing amount for debt papers, despite the increase in interest rates for two tenors, prompted by higher global oil prices.<br>The interest rate for the 91-day debt papers decreased slightly to 5.102 percent from the previous auction's 5.140 percent. The government raised the amount for the three-month securities, securing P7 billion instead of the initially planned P5 billion, as the total bids reached P18.36 billion.<br>On the other hand, the average interest rate for the 182-day T-bills slightly increased to 5.582 percent from the previous 5.578 percent. Nevertheless, the government also opted to increase its borrowing from P5 billion to P7 billion for the six-month securities, as total demands reached P16.91 billion.<br>Finally, the average rate for the 364-day T-bills increased to 5.973 percent from 5.829 percent. The Treasury achieved its target by raising P5 billion through the sale of the one-year debt papers, as total tenders reached P11.61 billion.
The national government decided to raise its planned domestic borrowings, despite the higher in interest rates for two tenors, which was driven by the higher global oil prices.
At an auction on Monday, Jan. 8, the Marcos administration sold short-term IOUs worth P19 billion, exceeding the initial P15 billion target.
Total tenders for the three-month, six-month, and one-year Treasury bills reached P46.88 billion.
Yield for the 91-day debt papers dropped slightly to 5.102 percent from the previous auction's 5.140 percent. This prompted the government to increase the amount for the three-month IOUs to P7 billion instead of the initially planned P5 billion.
The total bids for the 91-day T-bills reached P18.36 billion.
On the other hand, the average interest rate for the 182-day T-bills slightly increased to 5.582 percent from the previous 5.578 percent.
Nevertheless, the government also opted to increase its borrowing from P5 billion to P7 billion for the six-month securities, as total demands reached P16.91 billion.
Finally, the average rate for the 364-day T-bills increased to 5.973 percent from 5.829 percent.
The government achieved its target by raising P5 billion through the sale of the one-year debt papers, as total tenders hit P11.61 billion.
The auction yields are somewhat comparable with those in the second market at 5.23 percent, 5.51 percent, and 5.83 percent, for the three-month, six-month, and one-year securities, respectively, based on the Bloomberg Valuation Service (BVAL) rates.
The treasury auction yields continued to go up as T-bill and short-term PHP BVAL yields are still below the Bangko Sentral ng Pilipinas’ (BSP) overnight yield at 6.39 percent and key policy rate at 6.50 percent, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC).
He also cited the increasing global oil prices after the recent tensions at the Red Sea with Houthi rebels which “could increase shipping costs and could lead to some shipping delays.”
However, the chief economist stated that this could be offset by the possible -1.00 cut on the local policy rate to 5.5 percent by end-2024, the easing of inflation in December 2023, which is already within the BSP’s inflation target of 2 percent to 4 percent levels.