Yields on 3-mo, 1-year T-bills rise

MANILA, Philippines - Demand for short-term Treasury bills has seen a continuous uptrend amid a stable economy  which led to more aggressive bidding.

The Bureau of the Treasury made a full award across all tenors despite a significant increase in the rate of three-month and one-year papers.

At yesterday’s auction,  the average rate of the benchmark 91-day bill  edged up  12.5 basis points to 1.541 percent with total bids hitting P25.9 billion or more than three times the programmed debt sale of P8 billion for the paper.

The yield on 182-day paper fell 1.3 basis points to 1.758 percent.  The said paper was more than two times oversubscribed after tenders reached P13.61 billion.

The government, however, decided to stick to its borrowing program and sold only P6 billion worth of six-month T-bills.

The 364-day IOU, meanwhile, settled at  1.95 percent, up 1.1 percentage point from the previous rate of 1.84 percent.  Bids received amounted to P8.595 billion

National Treasurer Robert Tan said despite the increase, the average rates were still within secondary market trading levels.

“Very good turnout. Am pleased with the market reception of the offer.  They were well within the estimates based on our reading of the market,” Tan said.

“Since all bids were rejected last time, investors, looking for new supply,  scrambled to buy debt papers,” Tan said.

Rates for government securities are used by banks as benchmarks for the pricing of their own loans to businesses and consumers.

The government regularly holds auctions of securities to help fund the country’s budget and provide investors with fresh investment options.

The country has been favoring local borrowings over overseas funds since the start of 2011 to take advantage of the domestic financial system’s enormous liquidity and help ward off pressures on the exchange rate.

For this year, the government  intends to source 86 percent of its borrowing requirements from the domestic market while the remaining 14 percent will come come from lenders overseas.