T-bills rates rise ahead of August MB meet

Yields on Treasury bills climbed during Monday’s auction as creditors continued to lock in higher rates ahead of the Monetary Board (MB) policy review next month.

Auction results showed the Bureau of the Treasury (BTr) raised P20 billion via T-bills, as planned, after total demand for the offer hit P36 billion.

The average rate for the 91-day T-bills hit 5.779 percent, higher than the 5.743 percent rate at the previous auction. Likewise, the yield on the 181-day T-bill increased to 6.014 percent from 5.991 percent previously. Rates for the 364-day debt paper went up to 6.108 percent from 6.081 percent.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the yields on T-bills increased as lenders aimed to get longer-term interest rates before local and US Fed rate cuts later this year.

“Some investors prepare and prefer to lock in longer-term tenors… amid the expected 25 basis points (bps) [cut] as early as August,” Ricafort said.

BSP Governor Eli Remolona Jr. said earlier that the MB may cut rates by 25 bps as early as August and another 25 bps before the end of the year—possibly even ahead of the US Federal Reserve.

This is supported by Finance Secretary Ralph Recto, also a member of BSP’s policymaking body, as he underlined last week that the central bank is on track to cut rates within the year amid easing inflation.