T-bill rates rise amid lean demand

MANILA, Philippines — Demand for Treasury bills (T-bills), a form of short-term government securities, declined to its lowest level in almost five months, as investors await the US Federal Reserve’s rate decision following consecutive hits in the banking sector.

The Bureau of the Treasury yesterday made a partial award of P10.636 billion in T-bills, short of the P15 billion target.

This is the sixth week of partial award for T-bills, with the amount raised slightly lower this time after picking up last week.

Notably, overall demand for the short-term securities reached P17.806 billion, down 18 percent from last week’s P21.629 billion. Still, the auction was oversubscribed by 1.19 times.

This demand is the lowest in almost five months or since the P16.085 billion in bids tendered on Nov. 2 last year.

“Waiting for Fed decisions and markets remain on the edge as banking turmoil unravels,” national treasurer Rosalia de Leon said.

The Fed will hold its policy meeting on Wednesday with expectations of just a 25-basis-point increase amid recent developments in the global financial market.

These include the collapse of the Silicon Valley Bank and Signature Bank in the US, as well as the crisis faced by Credit Suisse in Europe.

The Bangko Sentral ng Pilipinas, on the other hand, will decide on its latest policy rate on Thursday with a similar increase or even a possible halt already on the table.

During yesterday’s auction, rates for the 91-day T-bills went up by 4.9 basis points to 4.911 percent from the secondary rate of 4.862 percent and above last week’s 4.664 percent.

On the other hand, the 182-day short-dated debt papers’ rates picked up by 11 basis points to 5.556 percent from the reference rate of 5.446 percent. This was higher as well from last auction’s 5.437 percent.

For the 364-day T-bills, rates averaged 5.864 percent, 6.3 basis points above the secondary rate and way above last week’s auction rate of 5.717 percent.

“Partial award to anchor rates within levels in secondary markets,” De Leon said.

For March, the Treasury has set a P200-billion local borrowing program. Of that, P75 billion is expected to be raised from short-term debt papers.

The Treasury has so far raised P43.183 billion.