MANILA -- The upward direction of Philippine Treasury bills (T-bills) were sustained on Tuesday, which National Treasurer Rosalia de Leon traced to high liquidity situation and expectations for further increase in interest rates.
Average rate of the 91-day paper went up to 3.218 percent from last week’s 3.203 percent; the 182-day to 4.070 percent from 4.064 percent and the 364-day to 4.879 percent from 4.869 percent.
“The rates were like 0.6 to one basis point higher than the previous auction so it’s aligned with our estimates. At the same time we saw a very healthy demand,” De Leon told reporters after the auction.
De Leon said the auction committee has its own expectations on rate increases, which are comparable with the levels submitted by banks.
She said the committee awarded all tenors in full on Tuesday because the uptick in rates remain within expectations.
“At this point we are very comfortable with our cash buffers. We are in a very good position to be able to also reject if we deem that it’s (the rates) not also reasonable based on our own expectations,” she said.
Bureau of the Treasury (BTr) offered the shortest-tenor paper for PHP4 billion but tenders were more than double at PHP8.135 billion.
The six-month paper was offered for PHP5 billion and banks submitted a total of PHP12.525 billion-worth of bids.
Tenders for the one-year paper reached PHP15.039 billion, higher than the PHP6 billion offering.
De Leon attributed the high liquidity situation to last week’s redemption by the government of maturing securities amounting to PHP86 billion. This week, there are about PHP9 billion maturities.
“Also, I think there’s also the assurance coming from the Jackson Hole summit wherein Fed Chairman Jerome Powell said the rate hike of the Fed would continue to be gradual,” she said.
She was referring to the annual Economic Policy Symposium of the Federal Bank of Kansas City in Jackson Hole, Wyoming attended by economists from around the world, financial market participants, and representatives of the US government and the academe. This 2018, the event was held from August 23-25.
Powell, during the event, said the Fed will likely raise key rates further and on a gradual manner if the US economy continues to expand. (PNA)
