Treasury bills move sideways

IMANILA, Philippines – Yields on the government’s Treasury bills (T-bills) moved sideways during yesterday’s auction as investors are on a wait-and-see stance ahead of the meeting of the Monetary Board next week.

The Bangko Sentral ng Pilipinas (BSP) is set to meet on Dec. 17, its last policy meeting for the year.

Monetary authorities are expected to keep interest rates steady as they have done since July.

The central bank’s overnight lending rate is currently at six percent while the overnight borrowing rate is at four percent.

The average rate of the 91-day debt paper moved sideways, increasing by 9.3 basis points to 3.887 percent from the previous rate of 3.794 percent.

Total tenders for the three-month paper reached P2.270 billion. The government’s auction committee accepted P1 billion worth of bids or awarding the offer in full.

The yield on the 182-day paper rose slightly to 4.095 percent from 4.090 percent previously.

The government’s auction committee awarded P2 billion as investors tendered a total of P5.840 billion.

Similarly, the yield on the 364-day T-bill rose to 4.562 percent from the previous rate of 4.499 percent.

Total tenders for the one-year paper amounted to P7.030 billion, twice the P3.5 billion offered by the auction committee, paving the way for a full-award.

All told, the Bureau of the Treasury sold a total of P6.5 billion worth of T-bills during yesterday’s auction, its last for the year.

National Treasurer Roberto Tan attributed the relatively strong demand for government papers to the lack of new supply from corporate issuers.

Corporate issuers took advantage of the cash-rich domestic market in the early part of the year but for the last month of 2009, investors do not expect more issuances.

As such, investors opted to park their funds in T- bills.

“The expectation is that there’ll be now substantial supply of new issues,” Tan told reporters after the auction.

He also said investors expect the BSP to keep policy rates unchanged when it meets on the 17th.

“I think they’r expecting the BSP to remain neutral,” he also said. –Iris C. Gonzales (The Philippine Star)