T-bill rates up across-the-board

Treasury bill (T-bill) rates went up across- the-board yesterday as the market brought the yields closer to secondary market rates in reaction to political concerns that investors perceived as threats on the country’s economic prospects.

Yesterday’s trade at the Bureau of Treasury (BTr) brought the interest rate on the benchmark 91-day treasury bills from 5.629 percent in the previous session to 5.966 percent, edging ever closer to the six percent mark.

National Treasurer Sergio Edeza told reporters that the market showed distinct preference for the longer-term instruments that had higher yields.

He said the market remains uncertain about the rate that it prefers although there appears to be a clear trend to bring it closer to the secondary market rate.

"I think the market is not sure what rate it wants for the 91-day treasuries," Edeza said. "The only thing clear that we saw today is that the market preferred the six-month and one-year treasuries."

He said sentiments were high as the market weighed in the political factors in their risk assessment.

"They want to factor in such issues as the Davide impeachment and even the candidacy of FPJ as they impact on the economy and ultimately, on the risks they are willing to take," he said.

Given these considerations and the temperament of the market, Edeza said the Treasury was not ruling out the possibility that the rates on today’s treasury bond offers would go up as well.

"As the peso weakens, there is also a tendency for rates to adjust," he added.

Interest rates have been going up steadily over the past few weeks. In yesterday’s auction, the rate for the 182-day T-bills went up to 7.055 percent while the rate on the 365-day bills went up to 7.884 percent.

"These increases were expected," Edeza said. "Its something that the market has been pushing for. They’re looking for a balance between BSP rates and the secondary market rates."

According to Edeza, the BTr is also toying with the idea of scrapping the 182-day Treasury bills altogether since the market clearly preferred the 91-day and the one-year bills.

"The 182-day bill is always the hardest to sell, there’s just no buyers so we might scrap this and we should expect a shift to the one-year treasury bills," he said.