The government partially forgives T-bills if interest rates continue to rise

THE GOVERNMENT partially awarded the treasury bills (T-bills) offered it on Monday as interest rates continued to rise on expectations of further rate hikes by the US Federal Reserve.

The Bureau of the Treasury (BTr) raised only 13.9 billion pesos through the auctioned short-term securities or similaronwards on Monday or less than the programmed P15 billion, although supply attracted P25.91 billion in bids.

At a breakdown, the Treasury awarded just P4.87 billion in 91-day T-bills versus the P5 billion on offer, even though total bids reached P9.47 billion. The average rate for three-month T-bills rose 23.1 basis points (bps) to 1.536% from 1.305% achieved during the previous auction.

The government also awarded a partial price of 4.03 billion pesos for 364-day paper against the 5 billion pesos or similaronwardsuh, even if the bids totaled 7.7 billion pesos. The average yield on the one-year paper rose 5.8 basis points to 1.792% from 1.734% previously returned.

Meanwhile, BTr borrowed P5 billion as planned via the 182-day T-Bills, which have attracted P8.74 billion in tenders. The tenor averaged a return of 1.607%, up 14.9 basis points from the 1.458% previously posted.

In the secondary market ahead of Monday’s auction, 91-, 182- and 364-day T-Bills traded at 1.2005%, 1.4172% and 1.7486%, respectively, based on PHP Bloomberg Valuation published in Philippine Dealing System Reference Rates website.

National Treasurer Rosalia V. de Leon said in a Viber message to reporters that T-bill interest rates continue to rise as more containment measures are expected from the US Federal Reservebottlenation.

Still, the rise in yields “has been tempered by expectations that BSP (Bangko Sentral ng Pilipinas) will hold rates steady,” Ms De Leon said.

Meanwhile, via Viber, a trader said T-bill returns were in line with expectations as the country moves toward policy normalization.

“While (the) market is fairly certain of a stable domestic policy rate, (are) the CPI indicators not so favorable for the future,” the trader said.

The trader noted that to date, Dubai crude has averaged $95 per barrel per year, which could be a winbottlecome to 4%, based on the sensitivity analysis of the GNP.

“That, coupled with aggressive guidance from the Federal Open Market Committee, will continue to put pressure on domestic interest rates.”

The Fed hiked interest rates by a quarter of a percentage point last week fifor the first time since 2018 to combat rising inflation. Six more increases are planned for the remainder of 2022.

The US CPI in February came in at 7.9% year-on-year, the highest in four decades.

Global oil prices have soared following Russia’s invasion of Ukraine on February 24, further stoking inflation concerns here and abroad.

despite insidebottleDue to international pressure, the BSP is expected to hold interest rates steady at its March 24 meeting as it supports the economic recovery, according to 15 out of 17 analysts polled business world called.

BTr plans to raise P250 billion from the domestic market this month, or P75 billion via T-Bills and P175 billion from T-Bonds.

The government borrows from local and external sources to fund a budgetficit limited to 7.7% of gross domestic product this year. — Jenina P. Ibanez

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