Government rejects all bids for T-bills

MANILA, Philippines — The government yesterday rejected all bids for P15 billion worth of Treasury bills (T-bills), with investors seeking higher yields as the outbreak of war between Russia and Ukraine continued to add inflationary concerns due to its impact on oil prices.

The Bureau of the Treasury said investors sought higher rates across the board for the safe haven assets, with total tenders reaching P18.542 billion.

Yields for the 91-day T-bills spiked by 59.1 basis points to 1.49 percent, while the 182-day T-bills spiraled by 57.9 bps to 1.736 bps. Similarly, rates for the 364-day T-bills swelled by 29.7 bps to 1.865 percent.

According to a finance official, the government expects borrowing costs to keep rising amid uncertainties over when the geopolitical crisis in Ukraine will die down.

The finance official said investors also sought increased returns for their capital to prepare for a possible spike in inflation as Russia’s invasion of Ukraine is influencing crude prices.

“We may have to see this scenario until there is clarity on how long the conflict in Ukraine lasts and until the Fed meeting in March,” the finance official said.

As noted, the US Federal Reserve will meet this month to discuss whether interest rates will be raised to tame inflationary pressures. US inflation grew at a 40-year high of 7.5 percent in January, compelling monetary authorities to tighten their belt on the fiscal end.

By raising interest rates, the US government hopes to propel borrowing costs in banks. In turn, consumers are expected to reduce their demand for big-ticket items like properties and vehicles that are driving up inflation.

In spite of this, National Treasurer Rosalia de Leon had told The STAR that the government has enough resources to sustain its programs and projects.

Even if the Treasury fails to borrow the P250 billion it programmed for March, De Leon said state cash will hold in case the worst-case scenario of a protracted conflict in Ukraine happens.