T-bill rates continue to soar

MANILA, Philippines — Borrowing from the domestic debt market remains challenging for the government as investors continue to insist on higher yields amid the US Federal Reserve’s aggressive moves to temper soaring inflation.

Results were mixed during yesterday’s Treasury bills (T-bills) auction as the Bureau of the Treasury only made a partial award of P3.35 billion out of the P15 billion on offer.

This is the sixth straight T-bills auction wherein the Treasury failed to raise its intended amount.

“Partial award for 182-day and full rejection for 91- and 364-day T-bills. Rates on the short end are very sensitive to aggressive actions of the Fed,” national treasurer Rosalia de Leon said.

The local market continues to react after the US Federal Reserve last week delivered yet another huge 75-basis-point rate hike.

This was followed by a 50-basis-point rate increase by the Bangko Sentral ng Pilipinas, bringing the benchmark rate to 4.25 percent, the highest since June 2019.

This week’s auction result was just a slight improvement from last week’s T-bills on offer – P5 billion each for three, six and 12 months – where the government raised a total of P3.16 billion.

The Treasury partially awarded P3.35 billion out of the P5 billion for the 182-day short-dated debt papers even as rates picked up by 25.4 basis points to 3.958 percent.

However, it rejected the 91-day T-bills as rates surged by 162 basis points to 4.397 percent – a continued upward movement from last week’s rate of 3.912 percent.

The Treasury likewise denied all bids for the 364-day T-bills after rates averaged 4.888 percent, soaring by 96 basis points. It even reached a high of 5.675 percent.

Yields for all the tenors went up on a weekly basis.

Overall, demand for the short-term securities improved eight percent week-on-week.

Total bids reached P17.664 billion, oversubscribing the auction by 1.18 times. This is slightly higher than last week’s P16.288 billion in demand.

By tenor, bids for the three-month T-bills decreased to P4.6 billion but six-month and full-year securities both went up, totaling to P9 billion and P4.064 billion, respectively.

Yesterday’s auction is the last T-bill offer for September where the government aims to borrow P200 billion from domestic creditors.

Of this, P60 billion is expected to come from short-dated T-bills. However, the Treasury has only raised 31 percent of its target or P18.58 billion in T-bills.