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Political noise lifts T-bill yields, trims borrowing as gov't misses ₱33-billion target
Political noise lifts T-bill yields, trims borrowing as gov't misses ₱33-billion target
By Derco Rosal
At A Glance
- Political uncertainty weighed on domestic lenders' sentiment, leading the government to fall short of its planned borrowing of up to ₱33 billion as rising interest rates continued to push financing costs higher.
Domestic lenders sought higher yields due to political uncertainty, such that the government fell short of its planned up to ₱33-billion borrowing from short-dated debt paper on Monday, May 18.
The Bureau of the Treasury (BTr) raised just ₱25.4 billion during its latest treasury bills (T-bills) auction, sustaining below-target borrowings since last week.
Total bids for the three T-bill tenors reached ₱40.7 billion, higher than the offering, but lower than the ₱44.9-billion demand on May 11.
The BTr fully awarded ₱13 billion for benchmark 91-day T-bills. Tenders for this tenor reached ₱19.9 billion, even as the average rate jumped to 5.074 percent from 4.85 percent last May 11.
For 182-day debt papers, the BTr raised ₱8.6 billion out of the ₱10-billion offer. Bids reached ₱15.2 billion, while the average rate rose by 62.4 basis points (bps) to 5.894 percent from last week’s 5.27 percent.
Meanwhile, the BTr struggled to find ample demand for 364-day IOUs, awarding only ₱3.8 billion against its ₱10-billion program, as bids for the longest T-bill tenor reached just ₱5.66 billion.
For the one-year T-bill, the average rate climbed by 31.8 bps to 6.037 percent from 5.719 percent last week.
PHP Bloomberg Valuation (PHP BVAL) Reference Rates on Monday showed that 91-, 182-, and 364-day T-bills were quoted at 4.911 percent, 5.291 percent, and 5.914 percent, respectively. Auction yields continued to settle above these secondary market benchmarks.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said yields increased following the breakout of the recent political controversy that has divided lawmakers from the opposing Marcos and Duterte blocs, distracting the legislative body from passing priority reforms.
The government plans to borrow ₱364 billion via T-bills during the second quarter, higher than the ₱324 billion eyed in the first quarter. T-bills will account for 46.4 percent of the ₱784-billion total domestic borrowing program for April to June.
Meanwhile, the government has scaled back its long-term borrowing plans, with treasury bond (T-bond) offerings set at ₱420 billion, down from the first quarter’s ₱500 billion.