BTr rejects all bids for T-bills as rates rise

MANILA, Philippines — The government failed to borrow yesterday from the local debt market after investors, cautious because of the impending interest rate hike, pushed yields way beyond market pricing.

The Bureau of the Treasury rejected all bids for the P15 billion in Treasury bills (T-bills) on offer due to a rise in interest rates across the board.

Yields for the 91-day T-bills swelled by 22.8 basis points to 1.759 percent from 1.531 percent a week earlier, forcing the Treasury to turn down tenders for the securities with the shortest tenor.

Had the Treasury awarded the 182-day and 364-day T-bills, it would be compelled to grant rates way beyond market quotation. Against average prices, yields for the three-month debt papers jumped by 53.8 basis points to 2.215 percent, while that for the full-year tenor rose by 86.6 basis points to 2.828 percent.

Demand for T-bills reached P23.531 billion, oversubscribing the offer by 1.57 times. A week ago, bid offers only amounted to P19.984 billion.

National Treasurer Rosalia de Leon said investors are preparing for a possible interest rate hike by BSP this coming Thursday.

Analysts said the Bangko Sentral ng Pilipinas (BSP) might as well start its normalization actions after the economy—as measured by the gross domestic product (GDP)—grew by 8.3 percent in the first quarter.

“The market remains defensive and bracing for possible rate hike by the Monetary Board with stronger than expected first quarter GDP growth,” de Leon said.

BSP Governor Benjamin Diokno has committed to increase policy rates only in June to support government efforts to jumpstart the economy. According to some economists, the first quarter GDP growth gives the BSP space to pursue a rate hike by as early as this month.