THE Bureau of the Treasury (BTr) received mixed results in its latest auction for Treasury bills (T-bills) on Monday, awarding a total of P13.399 billion from the P15 billion on offer, seeing higher rates for longer-dated securities.
National Treasurer Rosalia V. de Leon told financial reporters that the preference of the investing market was seen to settle at the shorter end of the curve given that tenders for the 91-day security amounted to as much as P15.8 billion.
“We see the preference continues to be on the short-dated papers particularly on the 91 day. We also see that again coming out of the inflation print of 5.2 percent, so the banks asked also for higher yields except for the 91 day. But on the 182 and 364 day there’s an uptick of about 10 to 15 basis points,” de Leon.
The Philippine Statistics Authority (PSA) last week reported that the Philippine economy registered an inflation rate of 5.2 percent for the month of June, which is 0.6 percentage points higher than the May level of 4.6 percent, also exceeding the target range of the Bangko Sentral ng Pilipinas (BSP) of 2 percent to 4 percent for the year.
The auction committee awarded the full P4 billion on offer given that tenders for the IOU reached as much as P15.8 billion, the average annual rate settled at 3.308 percent contracting by 9.6 basis points from the previous auction’s 3.404 percent.
Bids for the 182-day tenor reached P6.139 billion, prompting the auction committee to award the full P5 billion on offer, with the average annual rate settling at 4.045 percent expanding by 10.8 basis points from the 3.937 percent recorded in the previous auction for T-bills.
“So we see that there’s still very healthy bids for the T-bills at this time. Again, they still don’t want to lock up in the long end of the curve and it’s primarily because of expectations that there’s pressure again for the BSP to continue hiking…,” she added.
The auction committee decided to partially award the 364-day tenor with P4.399 billion from the P6 billion on offer, with the annual average rate being capped at 4.670 percent rising by 10.4 basis points from the previous level of 4.566 percent. Bids for the IOU reached P8.051 billion with the committee rejecting P3.652 billion in the end.
De Leon pointed out that demand for longer-dated securities may still be seen in the future since client demand varies over time.
“There will still be demand for the intermediary part of the curve, there will also be client demands in the long end, there will still be client demand coming from the institutional investors like the pension funds. And they…might also want to go for the long end because of the yield pick up, to take advantage of the higher rate also,” she said.
Over the May and June period this year, the Monetary Board raised interest rates by a total of 50 basis points, bringing the BSP’s overnight borrowing, lending and deposit rates at 3.5 percent, 4.0 percent and 3.0 percent, respectively.