T-bill yields mixed

MANILA, Philippines - Treasury bill auction posted mixed results yesterday with the government forced to cap rates at the longer end amid concern the US Federal Reserve may hike interest soon.

The average rate for 364-day T-bill – the longest paper offered – rose 19.7 basis points from previous auction to 1.88 percent. A total of P3.91 billion was sold against a P6-billion offer.

This was even after the Bureau of the Treasury capped the rate it was willing to accept at two percent. Had it gone for full award, rate would have risen to 2.02 percent.

Similarly, yield for the six-month papers also increased 6.6 basis points to 1.505 percent, while the shortest 91-day T-bill decreased four basis points to 1.281 percent.

The government awarded P6 billion and P8 billion, respectively, for each paper as planned. Total tenders for the three securities reached P32.82 billion, above the P20-billion offer.

“It’s really more on the Fed rate hike given the minutes that were out last week,” Deputy Treasurer Erwin Sta. Ana told reporters.

“And then if you look at the Fed fund futures it actually (shows) the probability is actually higher for (a) December hike,” he said.

Minutes of last month’s US Fed meeting showed three of its policy-setting committee members favored a rate hike, the biggest number recorded since Fed first abandoned its near-zero rate December last year.

A hike, if realized, will make emerging markets like the Philippines unattractive to investors, who may flock to the world’s safe haven for better yields.