T-bill rates up across the board

MANILA, Philippines — Rates for government securities have jumped across the board on fears that central banks here and abroad may tighten monetary policies faster than expected.

The Bureau of the Treasury yesterday made a partial award of P12.613 billion of the P15 billion in Treasury bills (T-bills) on board due to rising yields.

Rates for the 91-day T-bills went up by 13.2 basis points to 1.272 percent, while that for the 182-day T-bills swelled by 7.7 basis points to 1.635 percent. Likewise, rates for the 364-day securities rose by 3.2 basis points to 1.933 percent.

Overall, demand for the T-bills reached just P23.731 billion, oversubscribing the auction by 1.58 times. Also, bids for yesterday’s auction slipped by 37 percent from last week’s P37.638 billion as investors avoided the debt market on worsening uncertainties here and overseas.

Broken down, demand for the three-month T-bills amounted to P10.536 billion, while for the six-month debt papers hit only P8.582 billion. The full-year program only obtained P4.613 billion in bids from investors.

National Treasurer Rosalia de Leon said investors demanded increased rates across all issues, pricing in the impact of impending rate hikes by the US Fed and the Bangko Sentral ng Pilipinas (BSP).

“Bids higher as market immersed in both Fed and BSP aggressive tightening rhetoric,” De Leon said in a text message to reporters.

“[Fed chairman Jerome] Powell is open to frontloading rate hikes combined with balance sheet runoff to cool down overheating prices,” she added.

The Federal Open Market Committee will convene on May 3 to 4 to discuss its next measures in trying to contain inflation. The market expects the meeting to result in a 50-bps hike in the Fed’s rates, as the US central bank tries to push borrowing costs up to slash demand for inflationary drivers like properties and vehicles.

On the domestic end, de Leon said investors stay defensive due to the BSP’s assumption that inflation in April will go up to 4.6 percent. Last week BSP Governor Benjamin Diokno announced that the central bank may begin its tightening actions by as early as June.

The BSP in its outlook, said April inflation will land anywhere between 4.2 and five percent due to increased prices of electricity, fuel, as well as meat and fish.

“Looking ahead, the BSP will continue to monitor emerging price developments and the possible second round effects to help achieve its primary mandate of price stability that is conducive to a balanced and sustainable growth of the economy,” Diokno said.