PHL T-bill rates up across the board Monday

MANILA- Average rate of the Philippine government's Treasury bills (T-bills) rose Monday on higher probability of increase in Federal Reserve rates.

Rate of the benchmark three-month paper inched up to 2.374 percent from the 2.25 percent during the auction last Feb. 13, which Deputy Treasurer Erwin Sta. Ana said was in line with expectations.

"It's expected given that preference on shorter-dated notes and we feel that it's within our estimates internally," he said, citing high expectations for a hike in the Federal Reserve rate this month as the main driver of increase in the rates.

The Bureau of the Treasury (BTr) offered the securities for Php 6 billion and tenders reached Php 17,443 billion. The auction committee, thus, made a full award.

The auction committee also made a full award for the six month paper at Php 5 billion after tenders amounted to Php 11.235 billion. Average yield of this tenor rose to 2.60 percent, up from the 2.46 percent in the previous auction.

The average rateof one-year paper also went up to 2.79 percent from 2.76 percent previously.

Tenders for the one-year bill amounted to Php 6.665 billion, higher than the Php 4 billion offering.

Sta. Ana said Monday's auction was better than in the past after the Php 15 billion offering got bids more than twice higher at Php 35.343 billion.

"This represents, I think, the market's preference over short tenors and of course it's also an indication that the system is pretty liquid," he said.

The BTr official said banks were also starting to look for other investment instruments for the funds from their trust units that would be banned from the Bangko Sentral ng Pilipinas' (BSP) overnight deposit facilities.

"I think it's helping us in the government security side and that actually helps in terms of the demand of our securities," he said.

With the expected rise of interest rates as a result of the possible Fed rate hike this month and the eventual capital flight to the US, Sta. Ana said the government would continue to be pro-active on its liability management program.

"That means that we are also open to exploring other funding alternatives to the Republic so we are currently evaluating our options although those are currently on the drawing board at this stage," he added.

Source: Philippines News Agency