Bellwether T-bills up by 12.7 bps

Rates for bellwether 91-day Treasury bills (T-bills) went up by 12.7 basis points to settle at 5.248 percent as investors tested the government’s borrowing appetite.

National Treasurer Sergio Edeza said the increase in the benchmark bill was due to the decision of the government to increase the volume of its dollar-linked peso notes from P3 billion to P5 billion, spurring speculations that the government is in need of cash.

Rates for the 182-day T-bill, on the other hand, declined by 14.3 basis points to 6.277 percent while that of the 364-day T-bill closed at 7.201 percent from 7.196 percent previously.

Edeza said the market also factored in the BTr’ s move to increase the size of the 91-day T-bill offering to P4 billion.

The government has decided to increase its planned dollar-linked peso notes from P3 billion to P5 billion, saying that the demand for the instrument had increased sharply as the banking industry continued to suffer from a lack of credit demand from the private sector.

According to Edeza, the initial book-building process had generated over P16 billion worth of pledges, indicating that the market was eager for the government to increase the volume.

Despite the strong demand, however, Edeza said it was unlikely for the government to approve another increase in the dollar-linked peso notes issue even if prices become tempting.

"Whatever price they offer, we wouldn’t increase the offer. If they want to participate, let them buy our peso notes," Edeza said.

The planned dollar-linked peso notes issue would have a three-year maturity but the specific terms including the price and foreign exchange rate base, would be set once it has actually issued.

Dollar-linked peso notes allow investors to hedge against the volatility of the peso against the dollar.