Yields on T-bills fall across the board

MANILA, Philippines — Yields on short-dated government securities dropped across the board yesterday, as the Bureau of the Treasury (BTr) fully awarded the P15-billion offer.

Demand for the T-bills reached P76.365 billion, oversubscribing the auction by more than five times.

National Treasurer Rosalia de Leon said investors may sustain their buying activities in T-bills to fend off risks posed by the US Federal Reserve’s tightening policy on long-term bonds.

“Waiting for signal from Fed for rate liftoff, a strong bias for short tenors was seen with the sharp reduction on rates,” she said in a text message to reporters.

The rate for the 91-day T-bills slipped by 18.2 basis points to 0.693 percent, while the 182-day tenor dipped by two bps to 1.077 percent. Yield for the 364-day papers slid by 0.5 bp to 1.41 percent.

De Leon said the Federal Open Market Committee (FOMC) meeting scheduled this week should provide guidance on how fast the Fed plans to withdraw stimulus measures and raise interest rates.

During the FOMC meeting, the Fed is expected to set the timetable for its looming rate hikes to tame inflationary pressures. The government expects borrowing costs overseas to increase as a result of such actions.

In turn, the government will depend its financing program on domestic investors and multilateral institutions through the auction of debt papers and the acquisition of new loans, respectively. It may also end up avoiding the bond market abroad for the meantime, especially as central banks could follow suit on tightening to mirror the Fed’s move.

For February, De Leon said the Treasury has yet to come up with a final schedule of issuances, as the agency needs to see the outcome of the FOMC meeting first.

The government will trim its borrowings to P2.47 trillion this year, from a program of P3.07 trillion in 2021, as revenue collections pick up with the resumption of economic activities.