Benchmark interest rates move sideways on fiscal uncertainties

BENCHMARK interest rates moved sideways across all tenors as the market remained uncertian on the government’s fiscal position, the Bureau of Treasury said on Monday. The 91-day Treasury bill (T-bill) fetched 3.849 percent, or 4.8 basis points lower than the 3.897 percent the debt paper fetched on October 12.

The six-month T-bill fetched 4.144 percent, or 0.6 basis points higher than the 4.138 percent when last sold on October 12, while the one-year debt instrument fetched 4.406 percent, or 3.1 percent basis points higher than the 4.375 percent on September 8.

“There are some uncertainties the rate will go and the market is also uncertain on the deficit in spite of assurances. But it’s just almost the same as done deal. We just followed the secondary [market],” National Treasurer Roberto Tan said.

Secondary market rates for the three-month, six-month and one-year debt instruments were last quoted at 4 percent, 4.2 percent and 4.4 percent, respectively.

The P6.5-billion worth of the short-term debt papers were oversubscribed with total tenders reaching P15.17 billion, indicating that there is enough liquidity in the market.

Bids for the 91-day paper reached P4.55 billion, more than triple the P1-billion offer, while demand for the 182-day IOU hit P6.65 billion against P2 billion on offer. The 364-day received P3.98 billion in tenders against a P3.5-billion offer.

This year, the government was forced to borrow more after it raised its budget deficit ceiling to P250 billion from the previous P199.2 billion to support greater public spending to prop up the domestic economy amid the global slowdown.

The Philippines has resorted to two global bond issuances with an aggregate worth of $2 billion and is planning to undertake a Samurai bond offering before the year ends.

But last week, the Department of Finance said it might push through with the plan to tap the Japanese bond market this year if the two governments “failed to fill in the gap.”

The Bureau of Internal Revenue also said it may miss its full-year collection target owing to billions of pesos worth of damage caused by twin typhoons Ondoy and Pepeng.

The BIR is expected to collect P798.5 billion this year from an earlier program of P850.6 billion, or 2.56-percent higher than last year’s P778.6 billion. This target will be mainly supported by income tax, which is programmed to reach P504.86 billion this year. Excise tax collections are estimated to reach P61 billion while the percentage tax would add P46.78 billion to government coffers.

“The casualty loss caused by the storms will correspond to tax deductions. These are not anticipated. We also expect loss from revenue-eroding measures,” Joel Tan-Torres, BIR’s senior deputy commissioner, said. –Lailany P. Gomez, Reporter, Manila Times