91-day T-bill rate jumps
Lawrence Agcaoili
Manila Standard
The yield of the 91-day treasury bills yesterday surged by more than two percentage points on inflation worries brought about by rising oil and food prices.
The three-month debt paper—used by banks as the benchmark in pricing their loans—fetched 5.699 percent, or 202.6 basis points higher, from 3.673 percent when it was auctioned on Jan. 21.
“The Treasury has adjusted to the trend taking into consideration the announcement of inflation that was at the high end of expectations,” said Finance Undersecretary and National Treasurer Roberto Tan.
He said the results of yesterday’s auction took into account the perceived rate hike by the US Fed to be followed by another rate increase by the central bank’s Monetary Board during its scheduled meeting on July 17.
“The market has already factored in the hike [by the US Fed] and expectations of the [central bank] response. I think there is an expectation of an uptick in policy rates because of this,” he said.
The central bank increased policy rates by 25 basis points on June 5, bringing the overnight borrowing rate to 5.25 percent and the overnight lending rate to 7.25 percent.
The Bureau of Treasury scrapped the issuance of 91- and 182-day T-bills in the second quarter of the year due to lack of demand. The treasury only auctioned off 364-day T-bills to investors from April to June.
The treasury, however, decided to resume the auction of the three- and six-month debt papers in the third quarter of the year because of renewed interest from investors.
Total tenders for the three-month debt paper in yesterday’s auction reached P7.188 billion, with the auction committee making a partial award of P2.238 billion.
“We had a very meaningful volume. The market is active,” Tan said.
Had the committee made a full award of P3 billion, the debt instrument would have fetched 5.799 percent, or 212.6 basis points higher.
“It is too high. We based it on some trading levels,” Tan added.
The 364-day T-bills fetched 6.747 percent or 4.4 basis points higher from 6.703 percent on June 23. Tenders amounted to P6.36 billion and the committee made a full award of P3 billion.
Inflation surged to a 14-year high of 11.4 percent in June from 9.6 percent in May, exceeding the projected range of 10.4 percent to 11.2 percent made by the Bangko Sentral ng Pilipinas.
The central bank has raised its inflation forecast to a range of 7.0 percent to 9.0 percent this year from 3.0 percent to 5.0 percent. Inflation averaged 2.8 percent in 2007.
No Comments, Comment or Ping
Reply to “91-day T-bill rate jumps”