Treasury bills rates rise on partial award

MANILA, Philippines - The government made a partial award of Treasury bills (T-bills) Monday as it sought to allow investors to adjust to higher rates over an expected interest rate hike in the US next week.

In Monday’s auction, P4.245 billion worth of the benchmark 91-day T-bill was awarded against an offer of P8 billion. A total of P6.010 billion of the P10.255-billion tenders were rejected.

As a result, investors charged a rate of 1.836 percent for the paper, 6.3 basis points up from 1.773 percent in the previous auction. If target amount was raised, the government would have paid a higher 1.976 percent.

Six-month papers, on the other hand fetched a rate of 1.843 percent, an increase of 7.4 basis points from the last auction. A total of P4.120 billion was raised, while P4.20 billion was rejected.

If a full award was made, 182-day papers would have fetched a higher rate of 2.053 percent.

For the 364-day debt papers, only P2.10 billion was awarded, while the rest of P6.10 billion in tenders were rejected. The average rate was pegged at 1.952 percent.

This was up 7.4 basis points from previous auction’s 1.878 percent, but below the 2.687 percent investors would have charged for a full award.

The Bureau of the Treasury in a statement after the auction said the partial award reflects the government’s healthy budget position and the need for the market to be comfortable to adjustments.

“Amid healthy national government cash position, limited demand and rising rates, the auction committee decided to partially award…,” the Treasury said.

It added that the move was to “provide market guidance and allow a gradual adjustment” in rates should the US Federal Reserve decided to push through with its anticipated rate hike next week.

The US Fed has sent signals it would finally raise rates after more than a decade of keeping them near-zero, expressing confidence the world’s largest economy is strong enough to handle an increase in bank credit.

This, in turn, has triggered uncertainty in the financial markets, with the emerging economies such as the Philippines taking a blow from capital outflows seeking refuge in the world’s safe haven.