T-bills rise slightly across-the-board

The Bureau of Treasury (BTr) allowed a slight increase in Treasury bill (T-bill) rates at yesterday’s auction with yields for the bellwether 91-day T-bill rising to 5.225 percent from the previous 5.168 percent.

Deputy Treasurer Eduardo Mendiola said the auction committee accepted what it thought were reasonable rates, contrary to the mayhem that prompted the rejection of all bids two weeks ago.

"The bids were still on the high side but still within reasonable levels, reflective of market and economic fundamentals," Mendiola said.

"There are several ways that banks could park their funds," Mendiola explained. "But they won’t get as much yield as government securities. So to us, it is still a matter of liquidity."

Mendiola said the auction committee will not acknowledge coup jitters as basis for allowing interest rates to go up, saying that such concerns should not figure in the decision to accept or reject bids for T-bills.

At yesterday’s auction, rates for the 182-day T-bills went up to 6.367 percent from the previous 6.335 percent while that of the 364-day T-bills rose to 6.905 percent from 6.742 percent.

Two weeks ago, the BTr rejected all bid applications for the 91-day, 182-day and 364-day T-bills, warning banks that government could afford to continue rejecting their bids if the market insists on making unreasonable rates

"The rumors may be driving the market but we do not factor that in to our decision-making process," Mendiola said. "We can’t let interest rates go up just because there are rumors in the market."

The BTr has a considerable cash position after the successful closure of its Retail Treasury bond (RTB) offer which generated P74.31 billion.

The proceeds from its RTB offer alone has allowed the National Government to be more circumspect with the remainder of its borrowing requirements for the rest of the year as well as its pre-funding activities for 2004.

According to Mendiola, the market should take the cue from yesterday’s auction and the standing policy of the auction committee.

"One or two more auctions should convince the market that we will not allow rates to go up to unreasonable levels," Mendiola said.