91-day T-bill rate up 202.6 basis pts to 5.699%

The average rate of the 91-day Treasury bill (T-bill)  rose by 202.6 basis points to 5.699 percent from the previous rate of 3.673 percent as the government’s auction committee again started selling the debt paper yesterday after taking this out of the market for three months. During yesterday’s auction, the Bureau of the Treasury (BTr) accepted P2.238 billion worth of bids as total tenders reached P7.188 billion.

The rate would have risen to 5.799 percent had the auction committee accepted P3 billion worth of bids or an increase of 212.6 basis points from the previous rate. 

For the 364-day debt paper, the average rate rose to 6.747 percent from the previous rate of 6.703 percent or an increase of 4.4 basis points.

The government’s auction committee accepted P3 billion worth of bids as total tenders reached P6.36 billion.

Finance Undersecretary and National Treasurer Roberto Tan attributed the increase to the higher-than-expected inflation in June but noted that the committee was pleased with the volume.

“We had a very meaningful volume. The market is active. It has adjusted to the trend, taking into consideration the recent inflation report,” Tan told reporters after the auction.

Inflation or the rise in consumer prices rose 11.4 percent in June, above the high end of the central bank’s forecast range of 10.4 percent to 11.2 percent. The latest figure is above the 9.6 percent inflation rate recorded in May and the 8.3 percent recorded in April.

Tan said there is an uptick in T-bill rates because of expectations that monetary authorities will again raise rates on July 17 to contain soaring inflation. The central bank’s overnight borrowing rate is at 5.25 percent while the overnight lending rate is at 7.25 percent.

Prior to yesterday’s issuance, the auction committee last sold the 91-day debt paper in January as it decided to stop the sale of the debt paper due to higher-than-expected bids.  Last March, the BTr decided to temporarily stop the issuance of 91-day and 182-day T-bills given the lack of demand from banks.

Instead of 91-day and 182-day T-bill, the government opted to auction  364-day T-bills during the second quarter.