National Treasurer Rosalia de Leon (Photo from BTr)
MANILA – Bids for the Philippines’ one-year Treasury bills (T-bills) were rejected on Monday even after the decline of the debt paper’s interest rate after the auction committee noted low demand compared to the other tenors.
However, both the three-month and six-month papers were fully awarded following the strong demand and drop in their respective rates.
Had the auction committee accepted bids for the 364-day paper, its rate would have fallen to 2.716 percent from 2.930 percent during the auction last May 23.
Relatively, rate of the 91-day securities fell to 1.460 percent and the 181-day’s, which is a day less than the original tenor since its maturity falls on a holiday, slipped to 1.812 percent.
These were at 1.675 percent for the three-month paper and 1.892 percent for the six-month paper during the auction last week.
BTr offered all tenors for PHP5 billon each and total tenders for the three-month T-bills reached PHP22.341 billion; the six-month paper, PHP14.955 billion; and the one-year paper, PHP5.580 billion.
National Treasurer Rosalia de Leon, in a Viber message to journalists, said the auction committee “saw rates declined amid healthy demand and compressed bids close to secondary levels.”
“In contrast, full rejection for 364-day with tepid demand and unacceptable rates as market provides buffers for rate advances as hinted by BSP (Bangko Sentral ng Pilipinas) and another aggressive 50 bps (basis points) by Fed (Federal Reserve) to cool down inflation,” she added.
BSP’s policy-making Monetary Board (MB) hiked by 25 basis points the central bank’s key rates this month after noting the continued recovery of the domestic economy and the supply-side factor in the domestic inflation rate’s acceleration.
This brought the BSP’s overnight reverse repurchase (RRP) rate to 2.25 percent from record-low of 2 percent.
The rate increase is the first since December 2018 and follows the 200 basis points reduction in the BSP’s key rates in 2020, which is part of the central bank’s pandemic-related measures.
BSP Governor Benjamin Diokno earlier said the MB is open to another rate hike by June.
Relatively, the Fed’s key rates have been increased by a total of 75 basis points to date since the 25 basis points jump last March, which is also the first since December 2018.
The increase is part of the Fed’s move to help tame United States’ heating inflation rate, which rose to its four-decade high of 7.5 percent last January and accelerated to 7.9 percent, 8.5 percent, and 8.3 percent in the succeeding three months. (PNA)
