91-day T-bill rate climbs to 7.658%

The government allowed rates on 91-day and 182-day Treasury bills (T-bills) to rise but rejected all bid applications for 364-day bills at yesterday’s auction.

Rates for the 91-day T-bills, which banks use as benchmark in pricing loans, averaged 7.658 percent compared with 7.616 percent recorded on March 15, with the government awarding in full its P3.5-billion offering against total tenders of P4.882 billion.

On the other hand, the 182-day rate stood at 8.661 percent against the previous average of 8.612 percent, on a partial award of P1.735 billion against the government’s offering of P3 billion and total tenders of P3.635 billion.

National Treasurer Mina Figueroa attributed the high bids for T-bills to political uncertainties in the run-up to the May 10 presidential elections and market worries about possible monetary policy tightening by the BSP amid the build-up in inflationary pressures.

The government rejected all bid applications for 364-day bills, with offered rates ranging from 9.495 percent to 10.750 percent against the previous average of 8.384 percent.

The one-year bills were undersubscribed, with total tenders of P1.93 billion against an offering of P2.5 billion.

Figueroa said she still sees the upward pressure on T-bill rates to continue ahead of the May polls and amid market speculation about the BSP’s policy tightening, possibly through an interest rate hike.

"The preference was for the short-term papers given the uncertainty related to the elections and the BSP’s monetary policy," Figueroa said.

"But we think these are the rates acceptable to us," she said, hinting at the possibility of rejections in the coming auctions should banks continue to push the rates higher.

The nationwide inflation rate rose to 3.8 percent in March, accelerating from 3.4 percent in the previous month.

It reflected the inflationary pressure stemming from the peso’s weakness against the dollar and increases in oil prices.

This prompted economists to comment that the BSP is now under increasing pressure to tighten its policy.