91-day T-bill rate steady

The 91-day Treasury bill rate hardly moved yesterday while those of the 182-day T-bills and 364-day T-bills went up by at least 17 basis points.

The bellwether 91-day T-bill moved down by an almost unnoticeable 0.6 basis point to average this week at 8.919 percent from last week's average of 8.925 percent on a full award of the P1-billion offering.

The 182-day tenor climbed 28 basis points to average this week at 9.745 percent from last week's average of 9.465 percent on a full award of the P1.5-billion weekly offering.

The 364-day tenor followed the trend of the 182-day tenor, climbing 17.9 basis points to average this week at 10.462 percent from 10.283 percent last week. However, the government auction committee accepted only P500 million out of the total tenders of P1.945 billion for the weekly offering of P1.5 billion.

Bulk of the demand went to the 91-day tenor, with total tenders reaching P2.637 billion or more than twice the weekly offering of P1 billion.

Bangko Sentral ng Pilipinas (BSP) Gov. Rafael B. Buenaventura had projected that the rates would remain stable this week and while the short-term rate appears to be hovering at the current level, market apparently believes that rates would eventually have to go up in the long-term.

The Estrada government is trading carefully on interest rates as there is still no sign of an economic turnaround.

Allowing the short-term rates to rise could adversely affect lending and, in turn, economic activity.

So far, the BSP has been able to signal the market that there is still no need for short-term rates to rise by keeping its overnight borrowing rate at the same for almost seven months now.

It even managed to lower its lending rate to 11 percent from 12 percent last week, a signal which was not missed by the market as shown in the bids for the 91-day tenor yesterday.