T-bill rates rise on hawkish Fed, BSP

The government was able to fully raise its planned amount of short-term local borrowings during Monday’s sale of Treasury bills (T-bills) despite higher yields sought by creditors who were wary of hawkish signals from the US and Philippine central banks.

The Bureau of the Treasury (BTr) was able to borrow its target amount of P15 billion via T-bills.

The offering was met with robust demand from lenders. The T-bills attracted total bids amounting to P39.83 billion, exceeding the original size of the issuance by 2.7 times.

But the strong appetite from creditors did not stop rates from going up for the second straight week. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said local lenders absorbed the hawkish messages from the US Federal Reserve, which can influence the next policy moves of the Bangko Sentral ng Pilipinas (BSP).

Hawkish signals

“Treasury bill average auction yields were slightly higher after more hawkish signals from some Fed and other local monetary officials recently after the recent pick up in inflation,” Ricafort said.

Auction results showed the 90-day T-bill fetched an average rate of 5.870 percent, up from 5.772 last week. Similarly, the yield for the 181-day debt paper averaged 5.973 percent, more expensive than 5.885 percent in the previous issuance.

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The rate for the 364-day T-bill rose to 6.044 percent, from 5.983 previously.

Documents from the budget department showed the Marcos administration plans to borrow P1.85 trillion onshore in 2024. Of that amount, P672.1 billion will be raised via T-bills while P1.8 trillion will come from weekly auctions of Treasury bonds.

Those borrowings are needed to help plug a projected budget hole of P1.5 trillion this year, which is equivalent to 5.6 percent of gross domestic product. INQ