MANILA -- Investors’ continued demand for high yields constrained the Bureau of the Treasury’s (BTr) auction committee to reject bids for the bellwether 91-day Treasury bill (T-bill) Monday.
Had the auction committee made a full award for this tenor, rate of the debt paper would have risen to 3.966 percent which National Treasurer Rosalia De Leon dubbed as “outrageously high”.
Last week, the said tenor’s average rate stood at 3.549 percent.
BTr offered this tenor for PHP4 billion and tenders reached PHP5.435 billion.
Meanwhile, the auction committee made a full award for the 182-day paper, which fetched an average rate of 4.597 percent, higher than the 4.353 percent during the auction last September 10.
Tenders reached PHP7.304 billion, higher than the PHP5 billion offering.
The 364-day T-bill was partially awarded at PHP3.931 billion. It was offered for PHP6 billion and bids amounted to PHP7.999 billion.
Its average rate rose to 5.400 percent from 5.137 percent during the auction last week.
De Leon said yields demanded for the two longer tenor T-bills are “aligned with our own estimates, thus, these were awarded albeit partially for the one-year paper.”
She traced the high yield demand to expectations for another increase in the Bangko Sentral ng Pilipinas’ (BSP) key rates late this month.
BSP’s policy-making Monetary Board (MB) will have its sixth rate-setting meet on September 27, and it is widely expected to result in the further raising of key rates as inflation continues to rise.
Last August, rate of price increases went up to 6.4 percent from month-ago’s 5.7 percent on faster inflation rate of the food index, among others, due to supply-side factors.
To date, inflation averaged at 4.8 percent, way higher than the upper end of government’s 2 to 4 percent target until 2020.
Investors are also pencilling in an increase in the Federal Reserve’s key rates during the meeting of its Federal Open Market Committee on September 25-26. (PNA)
