Treasury bill rates rise as investors swamp auction

MANILA, Philippines – The government sold P8.5 billion worth of Treasury bills (T-bills) yesterday after investors swarmed the auction with total tenders reaching P23 billion or almost three times oversubscribed.

The average rate of the 91-day T-bill rose by 9.8 basis points to 3.948 percent from 3.850 percent previously. Banks’ highest offer stood at 3.950 percent while the lowest bid stood at 3.925 percent.

Investors gobbled up the government’s P2-billion offering, with total tenders reaching P7.417 billion.

The 182-day T-bill, meanwhile, yielded an average rate of 4.121 percent from four percent previously. The highest bid was 4.195 percent while the lowest offer fell at 3.9 percent.

As with the three-month paper, investors also swarmed the paper with total tenders reaching P6.789 billion or more than double the P3-billion offer size.

The 364-day Treasury bill, on the other hand, yielded an average rate of 4.338 percent, or 0.7 basis point lower than the previous rate of 4.345 percent.

Total tenders reached P9.040 billion, also more than double the P3.5 billion offer size.

National Treasurer Roberto Tan attributed the strong demand for debt papers to the successive rejections made by the government in the past three weeks of Treasury auctions and the P6.4 billion worth of T-bills scheduled to mature this week.

The bid volumes during yesterday’s auction indicated that market players were seeking investment outlets to park their excess liquidity.

Tan also said the slight uptick in the yields of the 91-day and 182-day debt papers were reasonable.

 “We think the small adjustments are warranted and in addition to that, the bid volumes were very meaningful,” he told reporters after the auction.

He refused to attribute the uptick in the average rates to the government’s swelling budget deficit.

 “I should hope not because as Finance Secretary Margarito Teves said we are intensifying our efforts to make sure that the deficit targets are maintained,” Tan said when asked whether market players sought a higher premium for their money because of the government’s widening budget gap.

From January to July, the government’s budget deficit hit P188 billion or 462.5 percent more than the P33.4 billion deficit recorded a year ago.

In July alone, the deficit hit P34.6 billion or 124.4 percent more than the P15.4 billion deficit recorded in the same period last year.

The government hopes to contain the budget gap at P250 billion by yearend or 3.2 percent of gross domestic product (GDP) from the previous program of P199 billion or 2.5 percent of GDP. –Iris C. Gonzales (The Philippine Star)