91-day T-bill rate rises to 2-yr high of 7.714%

The rate on bellwether 91-day Treasury bills (T-bills) rose to a two-year high of 7.714 percent yesterday as the government allowed banks to release their pent-up demand while rejecting all bid applications for the 182-day and 364-day T-bills.

National Treasurer Mina Figueroa said the market did not show enough volume to justify the increase in the rates for the longer tenor T-bills but the bids on the 91-day T-bills were more reasonable.

"Banks are preparing to make bids for the Bureau of Treasury’s retail Treasury bonds (RTB) today, taking the volume away from the six-month and one-year Treasury bills," Figueroa said.

Rates for the 91-day T-bills, which banks use as a benchmark for pricing commercial loans, averaged 7.714 percent at yesterday’s auction compared with the previous auction’s 7.634 percent.

Tenders amounted to a total of P7.787 billion but the auction committee awarded only P3.22 billion worth of three-month bills against an offering of P4.5 billion.

Both the 182-day and 364-day T-bills were undersubscribed, against offerings of P3.5 billion worth of six-month bills and P3-billion worth of one-year bills.

At the previous auction on June 7, the 182-day and 364-day T- bill rates averaged 8.631 percent and 9.416 percent, respectively.

The Bureau of Treasury (BTr) had originally planned to auction P4.5 billion worth of three-year T-bonds yesterday but canceled the offering in favor of the RTBs, by far the most popular instrument issued by the BTr.

Figueroa said the BTr was putting a cap on the total RTB offer but planned to make the announcement on the last day of the offer period because banks tended to hold back their bids until the very last day.

"We don’t want any more surprises so we want to flush them out long before the final day," Figueroa said.