Jittery investors push T-bill rates higher

MANILA, Philippines — Short-term government securities yesterday fetched higher rates as investors showed concern over the eruption of Taal Volcano and the tension between the US and Iran, the Bureau of the Treasury (BTr) said yesterday.

During yesterday’s auction, the average rate for 91-day Treasury bills (T-bills) rose by 14.9 basis points to 3.328 percent from 3.179 percent in the previous auction.

The P6 billion offering was fully awarded, as tenders reached P8.994 billion.

On the other hand, the auction committee decided to cap the accepted rates for 182-day debt notes at a high of 3.65 percent to temper down the increase in yield. 

As a result, the securities fetched an average rate of 3.587 percent, but this was still 15.2 basis points higher compared to last week’s level of 3.435 percent.

Total bids amounted to P6.8 billion, slightly above the P6 billion offer size, but only P4.85 billion was awarded.

Lastly, 364-day debt papers carried an average rate of 3.896 percent, which is 27.2 basis points higher compared to the previous auction result of 3.624 percent.

This is despite the auction committee’s decision to cap the accepted rate for the T-bills at 3.95 percent.

The P8 billion offering was slightly undersubscribed, with total tenders amounting to P7.425 billion. However, only P6.025 billion was awarded.

Sought for comment, National Treasurer Rosalia De Leon said the increase in rates could be attributed to the acceleration of inflation last December, as well as events, such as the eruption of Taal Volcano and the US-Iran tensions.

Meanwhile, the national treasurer said the BTr is planning to conduct a rebidding for the government’s P1 trillion indemnity insurance program to protect public assets from natural disasters, such as the Taal eruption.

She said the timeline for the bidding is still under discussion.

In the meantime, De Leon said the government has in place the Quick Response Fund and National Disaster Risk Management Fund to bankroll disaster relief efforts for the victims of the volcano explosion.

She said local government units should also have their assets covered by insurance through the Government Service Insurance System.