T-bills inch up across the board

REPORT FROM BUSINESSWORLD Treasury bill (T-bill) rates rose across all tenors Monday as it tracked the secondary market, bond traders said. The rate of the 91-day T-bill went up to 3.477% from 2.996% during the auction on May 21. The 182-day T-bill rate also rose to 4.639% from 4.274%, while the 364-day T-bill rate inched up to 5.438% from 5.174%. The government canceled Treasury bill auctions in June because it preferred more liquid Treasury bonds. It was, however, forced to resume the auction due to market demand. The government securities were well received by a market seeking alternative assets. Banks offered to buy as much as P3.14 billion worth of 91-day T-bills, P6.975 billion of the 182-day debt paper, and P7.145 billion of the 364-day T-bill, for a total offer of P17.26 billion. The government, however, sold only P1 billion worth of the 91-day paper, P1.5 billion of the 182-day paper and P2.5 billion of the 364-day debt. "Compared with previous auctions, circumstances have changed and the awards were below trading levels except for the 364-day T-bill,"acting National Treasurer Roberto B. Tan said. He said the government would not allow any excessive increase in interest rates. A bond dealer said the rate rise had not come as a surprise. "There is an uptrend in rates, which is due to the Bangko Sentral ng Pilipinas’ successful opening of its special deposit account window to government financial institutions. The policy move was meant to siphon off liquidity from the system, which is inflationary. "The Bureau of the Treasury had prevented fueling market sentiment [for higher rates] by cancelling the auctions [in June]. Moreover, the rates were lower than expected,"the bond dealer said. The government has said it was sticking to its borrowing plan and a P63-billion budget deficit target for the year even though tax revenues in the first five months had fallen 8% short of its internal target of P469 billion. The Philippines, among Asia’s largest sovereign debt issuers after Japan, plans to borrow $2.466 billion abroad this year and P260 billion in the domestic market to finance its budget deficit and pay off maturing debts.