T-bill demand hits 8-month low

MANILA, Philippines — Demand for the government’s short-term securities slipped to its lowest level in eight months as investors anticipate a hawkish US Federal Reserve.

The Bureau of the Treasury yesterday made a partial award of P9.219 billion out of the P15 billion on offer. This is the first auction for July.

This marked the fourth straight week of partial award for T-bills, with the amount raised declining from last week.

Similarly, demand slipped for the sixth straight week at P17.419 billion.

Demand hit its lowest in 32 weeks or since the P16.085 billion on Nov. 2 last year.

In a Viber message, national treasurer Rosalia de Leon attributed the decline   to the “US Fed’s rhetoric of higher rates for longer.”

The US Fed recently said it could still raise interest rates twice this year. The first one is seen being implemented in its meeting slated this July.

Last month, the Fed finally eased off in its hiking cycle, keeping rates unchanged after 10 consecutive rate increases.

Meanwhile, rates yesterday went up across the board for the 91, 182 and 364-day offers.

Rates for the 91-day T-bills picked up 3.9 basis points to 6.15 percent from the secondary rate of 6.111 percent and still above last week’s 6.086 percent.

As such, the Treasury only awarded P2.954 billion out of the entire P5 billion on offer for the three-month T-bills.

On the other hand, the 182-day short-dated debt papers saw rates go up by 8.4 basis points to 6.266 percent from the reference rate of 6.182 percent. This was also higher than the last auction’s 6.144 percent.

Rates also averaged 6.286 percent for the 364-day T-bills, 6.8 basis points above the secondary rate and up from last week’s auction rate of 6.219 percent.

The Treasury only awarded P2.67 billion and P3.595 billion for the six months and one year tenors, respectively, out of P5 billion each.

Overall demand for the short-term securities inched down by just a percentage to P17.419 billion. The auction was oversubscribed by 1.16 times.

Bids slid to P6.584 billion and P4.63 billion for the three-month and six-month offers, but increased to P6.205 billion for the one-year securities.

For this month, the Treasury targets to borrow P180 billion from the local debt market. Of this, P60 billion is expected to be raised from short-term T-bills.