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THE
average rate for 364-day Treasury bills yesterday fell
5.6 basis points to 6.79 percent in what the Bureau of
Treasury said was a correction in the market and rise in
demand.
The rate
was 6.846 percent when 364-day bills were auctioned on
May 26.
The
government IOU was more than twice over- subscribed with
P14.479 billion in total tenders on an offer of P6
billion. It was awarded in full.
Finance
Undersecretary Gil Beltran said the market was quite
volatile and needed a correction. “Financial markets are
in turmoil, as seen in the 3.42-percent decline in the
[Philippine] stock market. But we can survive these
things. We are in much better shape now,” he said.
A bond
trader from a universal bank said the big demand in
yesterday’s auction was caused by client demand on
government securities, such as the six- and three-month
bills.
“There
is client demand in the shorter end of the curve, and
because we haven’t been having auctions of six-month and
90-day bills, clients were forced to buy the one year
[bills],” the trader said.
The
government has scrapped auctions of six-and three-month
bills this quarter after the market showed preference
for longer-term bills and because of the high bids
placed on the shorter-term bills.
“If the
market will still bid as before, the Treasury will only
reject them. Especially now that the central bank has
raised interest rates and banks are still putting money
in the special deposit facility,” a trader said.
“Clients
still prefer government securities. It’s safer and is
practically risk-free. It’s also very liquid compared to
corporate bonds,” the trader added. |
